Evaluating Intergenerational Consequences by the Pareto Principle:Efficiency When Future Identities are Unobservable

29 Pages Posted: 2 May 2024

See all articles by Geir B. Asheim

Geir B. Asheim

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

Kohei Kamaga

Faculty of Economics, Sophia University

Stéphane Zuber

Université Paris I Panthéon-Sorbonne - Centre d'Economie de la Sorbonne (CES)

Abstract

It has been claimed that the Pareto principle can evaluate efficiency-improving policies with long-lasting intergenerational consequences. Climate policies is a prime example, seeking to correct the externality that emitters of greenhouse gases do not pay for the future consequences of their emissions. However, climate policies may lead to different identities of future people, implying that the Pareto principle is not fully applicable. Assuming that there are infinitely many future people whose identities are not observable, we specify conditions under which their spatiotemporal positions do not matter. This implies that the Suppes-Sen principle whereby rank-ordered streams are compared plays an important role and justifies the following dominance relation: A state a dominates another state b if a Pareto dominates b for existing people and Suppes-Sen dominates b for future people, where one of the two need not be strict. We illustrate the properties of this dominance concept for policy choice.

Keywords: Climate change, Efficiency, Intergenerational equity, Population ethics, Infinite streams.

Suggested Citation

Asheim, Geir B. and Kamaga, Kohei and Zuber, Stéphane, Evaluating Intergenerational Consequences by the Pareto Principle:Efficiency When Future Identities are Unobservable. Available at SSRN: https://ssrn.com/abstract=4815700 or http://dx.doi.org/10.2139/ssrn.4815700

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)

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Munich, DE-81679
Germany

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

Kohei Kamaga

Faculty of Economics, Sophia University ( email )

7-1, Kioi-cho
Chiyoda-ku
Tokyo, 1028554
Japan

Stéphane Zuber

Université Paris I Panthéon-Sorbonne - Centre d'Economie de la Sorbonne (CES) ( email )

106-112 Boulevard de l'hopital
106-112 Boulevard de l'Hôpital
Paris Cedex 13, 75647
France

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