Siblings, not triplets: social preferences for risk, inequality an time in discounting climate change

Arguments about the appropriate discount rate often start by assuming a Utilitarian social welfare

function with isoelastic utility, in which the consumption discount rate is a function of the (constant)

elasticity of marginal utility along with the (much discussed) utility discount rate. In this model, the

elasticity of marginal utility simultaneously reflects preferences for intertemporal substitution,

aversion to risk, and aversion to (spatial) inequality. While these three concepts are necessarily

identical in the standard model, this need not be so: well-known models already enable risk to be

separated from intertemporal substitution. Separating the three concepts might have important

implications for the appropriate discount rate, and hence also for long-term policy. This paper

investigates these issues in the context of climate-change economics, by surveying the attitudes of

over 3000 people to risk, income inequality over space and income inequality over time. The results

suggest that individuals do not see the three concepts as identical, and indeed that preferences over

risk, inequality and time are only weakly correlated. As such, relying on empirical evidence of risk or

inequality preferences may not necessarily be an appropriate guide to specifying the elasticity of

intertemporal substitution.

Referanse

Atkinson, Giles, Simon Dietz, Jennifer Helgeson, Cameron Hepburn and Håkon Sælen, 2009. Siblings, not triplets: social preferences for risk, inequality an time in discounting climate change. Economics,

Flere detaljer

  • Språk: Engelsk
  • Kategori: Tidsskriftartikler
  • Tittel: Siblings, not triplets: social preferences for risk, inequality an time in discounting climate change
  • Tidsskrift: Economics

Nøkkelord

Sist oppdatert: 02.01.06

Nedlastning

  • Last ned Referanse (RIS Import Format for Reference Manager, EndNote Plus etc.)

Forfattere

  • Atkinson, Giles
  • Dietz, Simon
  • Helgeson, Jennifer
  • Hepburn, Cameron
  • Sælen, Håkon
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