Discounting and impatience with overlapping generations

Measuring individuals’ rate of time preferences and comparing how they value past decisions when they have a positive rate vs. a zero or negative rate can tell us something about how people ought to value their own consumption/wealth over time if they want to maximise their own satisfaction.

But this kind of information tells us next to nothing about how individuals ought to value other’s consumption/wealth in the future on moral grounds.

I feel as though something is lost somewhere along the lines of your analysis by not dealing with the effects of time specifically enough.

As time progresses forward, society sees periods time (albeit on average less than a second long) during which nobody is born, and moments in which one person is born. Given your assumptions, what happens in each of those cases? What happens to a society with your assumptions during a period of time involving no births or deaths? What happens to a society with your assumptions when someone is born, or when someone dies?

I guess what I’m saying is that, because there are periods of time that pass during which there are no births and no deaths, the statement that everyone alive now is equal is not equivalent to the statement that everyone alive now and everyone who will ever live are all equal.

Aaron – my point exactly

Then I am lost, what does this mean?

“The analogy with social decisions that favor current generations (more precisely, those currently in a position to make social choices) over future generations is obvious.”

Are you trying to make a normative point? Trying to guess what your point is I have come up with two possibilities

A) You are claiming that 1) because the individual’s time preference for their own wealth is morally irrelevant to what they are owed and what they owe to others we 2) have a moral duty to be concerned with future generations in some way. But the negative argument against 1) does not entail a positive argument for 2) and tells us nothing about what these obligations should be.

B) The other moral argument I gather from your text is that we have a duty to do what we can to make sure that future generations enjoy as much welfare as we enjoyed over our life times. This is certainly a popular moral stance but I do not understand how the analogy to individual’s time preference adds anything to our understanding of this moral claim. The only thing that does any normative work in your comment is your normative premise ‘all living people are owed equal consumption’ combined with the parameters of your example, namely a “stationary society with overlapping generations constant population, equal wealth, no technical progress and a steady state capital stock.” But what are the implications for intergenerational justice and wealth transfers, and does the analogy to individuals’ time preference tell us anything?

I basically doubt the premise of this and the other threads. In particular, I don’t think that this should be regarded as a transaction between this generation of individuals and a series of later generations of individuals. It’s really a relationship between the present generation and the future human race as a whole (every future generation). We have the possibility of doing permanent damage.

Environmental protection might be regarded as the kind of deferred gratification involved when an old man invests money he’ll never see the profits from instead of blowing it all on high living. Sacrifices of the latter type seem to be praised by most economists, whereas sacrifices for environmental protection. Getting to government-mandated sacrifices is a more difficult step, I suppose.

Economists tend to underestimate the risk and magnitude of environmental change while overestimating the costs of environmental preservation. They also tend to work in a short timeframe of decades or at most afew centuries, whereas environmental events often require looking at much millenia.

I have a much longer argument at my URL.

What John E said. Relationship between this generation and the whole species. A matter of natural selection; evolution (or devolution, if you wish). You can find a longer argument here.

John, how do you feel about arguments such as Parfit’s:

… children conceived more than a month earlier or later would in fact be different children. Since the choice between … two policies would affect the timing of later conceptions, some of the people who are later born would owe their existence to our choice of one of the two policies. If we had chosen the other policy, these particular people would never have existed …

The gist of his argument seems to be that the population that eventually results from a policy is wholly different from the population that results from another policy. It’s therefore problematic to claim that future generations been harmed by a policy. In fact, that policy may have given them life.

Well, we know that there will be an extinction-level event out there. According to well-settled science, the Sun will eventually expand to a size that will engulf the Earth’s orbit. It’s billions of years away, but modern science is as sure as it ever gets that it will happen. Isn’t your analysis saying that we owe it to future generations to spend some amount of money studying how to build space arks and Dyson spheres?

I’m not trying to be snarky; I’m just trying to use an extreme example as an illustration. Overlapping or not, there’s some point far enough in the future that even you don’t care about it yet, isn’t there?

16: Given that we have billions of years to work with, I’d say we’re making pretty reasonable progress on the space ark. From an environemental POV the next million years is the approximate time frame.

Oddly, some of the transhumanist types I run into combine several seemingly-contradictory attitudes: 1.) there’s no real environmental problem, technological progress will take care of it; 2.) the world is hopelessly fucked up by politics, and there’s really no home; 3.) bulding homes in space to escape to really shouldn’t be that hard.

What I find odd is tech optimism combined with utter political fatalism, which is usually also combined with global warming denial and an intense hatred of environmentalists. This mix comes from smart, hyper-rational people, but it sometimes seems like a Rorschach test of personal obsessions.

I call BS

“Our obligation to other people is contingent on their actually existing – note that the overlapping generations point makes the idea of separate current and future populations untenbale.”

If we are only concerned with the future consumption (as economist suggest) of people that are alive today then we have a clear moral duty NOT TO DO ANYTHING ABOUT CLIMATE CHANGE. The time lag between current efforts and future benefits (measured in benefits to consumption compared with the do nothing scenario) is too far off. Those making policy today best secure the future consumption of people alive today by not taking costly measures to address climate change.

Yet we can see the obvious implications of this choice structure. This means that we are valuing the future consumption of people alive today as opposed to the future consumption of people that are not alive now but will be alive in the future. Already here we are making a moral choice, and this choice is not dissolved by the fact of overlapping generations. We can see this easily when we consider the fact that each generation will, if they are only concerned with the future consumption of people alive at that time, make the same choice not to do anything about climate change. They may wish that past decision makers had chosen to address climate change but the best strategy for securing the future consumption of people alive at any given time will be to continue to do nothing. This is because any efforts they make will at best only give marginal improvements on climate (i.e. marginal improvements on the effects of climate change on consumption), and as a result avoiding the costs of mitigation will give much more in terms of consumption to the young of any given generation.

Again we are well aware on this feature of the climate change problem, and when we implement a policy based on the principle that “obligation to other people is contingent on their actually existing” we make a clear moral choice that the predictable pollution of the atmosphere and the effects on people over the long term is not morally important. So the fact of overlapping generations in no way allows us to avoid questions about what we owe to people in the middle to distant future.

(For an example of a study on the impacts on consumption levels from mitigating climate that simply compares consumption levels at various points in time between the mitigation and do nothing scenarios (i.e. a study that avoids controversial claims about how to weigh welfare between generations and the appropriate discount rate) see, Y. Okan Kavuncu and Shawn D. Knabb, “Stabilizing Greenhouse Gas Emissions: Assessing the Intergenerational Costs and Benefits of the Kyoto Protocol,” Energy Economics 27, no. 3 (2005).)

If this is indeed a matter of natural selection and species survival, then it’s hardly a matter of economics. It’s in the field of biology and evolutionary psychology. As long as individuals are predisposed to consume as much as possible and procreate as much as possible, nothing is going to help.

Considering diminishing birth rates in the developed world, it seems that there is some kind of a mechanism on the procreation side, but the drive to consume in the dominant strain seems virtually unrestricted, which is indeed the cause of its dominance.

Environment-minded balanced civilizations (like North-American indians) get wiped out and disappear, the splendid blonde beast prospers.

I don’t myself like Parfit’s thinking much but can’t easily say why. However, am I right to think that when you say:

… since generations overlap, if, at all times, we treat all people now alive as equal then we must treat all people now and in the future as equal.

this could be rephrased as:

… since generations overlap, if, at all times, we treat all people now alive as equal this will have the attendant effect of treating unborn future generations as equal

I think what Tom T wrote is kinda relevant. If we know that humanity will be extinct with certainty by a certain time, a 0 discount rate becomes actually feasible.

On the Parfit point: I think he is correct, but than we simply are forced to make comparisons between potentially existing persons. We get into the question of what people we want to exist. Peter Hammond argues that interpersonal comparisons of well-being are basically preferences for diferent kinds of people, so this may not be that troubling in a utilitarian framework.

Of course. But there is a impossiblity theorem that basically say that one cannot order infinite utility streams in a way that treats all generations equaly. Extinction should IMO be a change in utility and be in the order. But if we know that only, say, n generatins will exist at most, the problem disappears.