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Cross-Dynastic Intergenerational Altruism

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  • Nesje, Frikk
Abstract
This paper studies whether saving behavior reveals socially relevant intertemporal preferences. I decompose the present generation's preference for the next into its dynastic and cross-dynastic components. If people are concerned about sustainability or if their descendants move or marry, then they might assign welfare weights on other dynasties. With such cross-dynastic intergenerational altruism, saving for one's descendants benefits present members of other dynasties. These preference externalities imply that socially relevant intertemporal preferences cannot be inferred from saving behavior. The external effect of present saving decreases over time. This means that intertemporal preferences inferred from saving behavior are time-inconsistent.

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  • Nesje, Frikk, 2021. "Cross-Dynastic Intergenerational Altruism," EconStor Preprints 242961, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:242961
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    Cited by:

    1. Ahlvik, Lassi, 2022. "Will of the living dead — The case for a backward-looking welfare function," Economics Letters, Elsevier, vol. 214(C).
    2. Robert C. Schmidt & Moritz Drupp & Frikk Nesje & Hendrik Hoegen, 2022. "Testing the free-rider hypothesis in climate policy," Papers 2211.06209, arXiv.org.
    3. Frikk Nesje & Moritz A. Drupp & Mark C. Freeman & Ben Groom, 2022. "Philosophers and Economists Can Agree on the Intergenerational Discount Rate and Climate Policy Paths," CESifo Working Paper Series 9930, CESifo.

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    More about this item

    Keywords

    Intergenerational altruism; Social discounting; Time-inconsistency; Declining discount rates; Generalized consumption Euler equations; Interdependent utility; Isolation paradox; Climate change;
    All these keywords.

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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