Intergenerational Equity, Efficiency and Constructability

16 Pages Posted: 14 Aug 2010

See all articles by Luc Lauwers

Luc Lauwers

KU Leuven - Center for Economic Studies

Date Written: July 2010

Abstract

Global environmental issues - like biodiversity conservation or climate change - are in reality long term issues that are not properly taken into account with traditional models that incorporate the impatience axiom manifested in fixed discount factors and in the use of present discounted utility criteria. When both the short and the very long run are important, one can appeal to overtaking criteria and Chichilnisky criteria. Unfortunately, overtaking criteria are highly incomplete. In order to decrease this incompleteness, stronger anonymity (or equity) axioms were developed. I show that a maximal anonymity axiom compatible with Pareto is a non-constructible object; its existence relies on the Axiom of Choice. The Chichilnisky criterion is based upon two axioms: non dictatorship of the present and non dictatorship of the future. Here, the very long run is captured by a finitely additive measure. Such a measure is a non-constructible object and has therefore no explicit description.

Suggested Citation

Lauwers, Luc, Intergenerational Equity, Efficiency and Constructability (July 2010). Available at SSRN: https://ssrn.com/abstract=1657886 or http://dx.doi.org/10.2139/ssrn.1657886

Luc Lauwers (Contact Author)

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium