Consumption, Risk, and Prioritarianism

24 Pages Posted: 12 Oct 2014 Last revised: 20 Dec 2014

See all articles by Matthew D. Adler

Matthew D. Adler

Duke University School of Law

Nicolas Treich

French National Institute for Agricultural Research (INRA); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 4, 2014

Abstract

This paper examines consumption decisions under risk assuming a prioritarian social welfare function, namely, a concave transformation of individual utility functions. Under standard assumptions, there is always more current consumption under ex ante prioritarianism than under utilitarianism. Thus, a concern for equity (in the ex ante prioritarian sense) means less concern for the risky future. In contrast, there is usually less current consumption under ex post prioritarianism than under utilitarianism. The paper concludes with a discussion of the robustness of these results to learning and to other forms of prioritarian social welfare functions.

Keywords: Precautionary savings, utilitarianism, prioritarianism, discounting, climate change

JEL Classification: D81, I31, E21

Suggested Citation

Adler, Matthew D. and Treich, Nicolas, Consumption, Risk, and Prioritarianism (October 4, 2014). Available at SSRN: https://ssrn.com/abstract=2508440 or http://dx.doi.org/10.2139/ssrn.2508440

Matthew D. Adler (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Nicolas Treich

French National Institute for Agricultural Research (INRA) ( email )

147, rue de l'Universite
Paris Cedex 07, 78-Yvelines 75338
France
+33 0 1 42 75 90 00 (Phone)
+33 0 1 47 05 99 66 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
53
rank
371,626
Abstract Views
498
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information