Sustainability and Discounted Utilitarianism in Models of Economic Growth

41 Pages Posted: 19 Jan 2009

See all articles by Geir B. Asheim

Geir B. Asheim

University of Oslo - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Tapan Mitra

Cornell University - Department of Economics

Date Written: January 2009

Abstract

Discounted utilitarianism treats generations unequally and leads to seemingly unappealing consequences in some models of economic growth. Instead, this paper presents and applies sustainable discounted utilitarianism (SDU). SDU respects the interests of future generations and resolves intergenerational conflicts by imposing on discounted utilitarianism that the evaluation be insensitive to the interests of the present generation if the present is better off than the future. An SDU social welfare function always exists. We provide a convenient sufficient condition to identify SDU optima and apply SDU to two well-known models of economic growth. We also investigate the axiomatic basis for SDU.

Keywords: intergenerational equity, sustainability, discounted utilitarianism, egalitarian consumption streams, efficiency, exhaustible resources

JEL Classification: D63, D71, Q01

Suggested Citation

Asheim, Geir B. and Mitra, Tapan, Sustainability and Discounted Utilitarianism in Models of Economic Growth (January 2009). CESifo Working Paper Series No. 2521, Available at SSRN: https://ssrn.com/abstract=1329880 or http://dx.doi.org/10.2139/ssrn.1329880

Geir B. Asheim (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway
+47-2285 5498 (Phone)
+47-2285 5035 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Tapan Mitra

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-6283 (Phone)

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