@article{e076d5fe2f0a468888b1fd550e1cc175,
title = "A Theory of Intergenerational Altruism",
abstract = "Modeling intergenerational altruism is crucial to evaluate the long-term consequences of current decisions, and requires a set of principles guiding such altruism. We axiomatically develop a theory of pure, direct altruism: Altruism is pure if it concerns the total utility (rather than the mere consumption utility) of future generations, and direct if it directly incorporates the utility of all future generations. Our axioms deliver a new class of altruistic, forward-looking preferences, whose weight put on the consumption of a future generation generally depends on the consumption of other generations. The only preferences lacking this dependence correspond to the quasi-hyperbolic discounting model, which our theory characterizes. Our approach provides a framework to analyze welfare in the presence of altruistic preferences and addresses technical challenges stemming from the interdependent nature of such preferences.",
keywords = "Pure altruism, intergenerational welfare, nonpaternalistic altruism, present bias, quasi-hyperbolic discounting, time inconsistency, welfare criterion",
author = "Simone Galperti and Bruno Strulovici",
note = "Funding Information: The authors are grateful to S. Nageeb Ali, Nabil Al-Najjar, James Andreoni, Geir B. Asheim, Doug Bernheim, Eddie Dekel, Wiola Dziuda, Jeff Ely, Drew Fudenberg, David Laibson, Bart Lipman, Ehud Kalai, Emir Kamenica, Peter Klibanoff, Mark Machina, Paul Milgrom, David G. Pearce, Todd Sarver, Ron Siegel, Marciano Siniscalchi, Joel Sobel, and Asher Wolinsky, as well as seminar participants at UC San Diego, Stanford, l'Universit{\'e} de Montr{\'e}al, RUD 2014, University of Chicago, Yale, NASMES 2014, SITE 2014, UCL, WU St. Louis, UC Berkeley, QSPS Utah, and Pennsylvania State University for useful comments. An early version of this project was developed by the second author and presented at Northwestern University and the 2011 SAET conference in Faro, Portugal under the title “Forward-Looking Behavior, Well-Being Representation, and Time Inconsistency.” A subset of the results appeared in a working paper by the same authors, titled “From Anticipations to Present Bias: A Theory of Forward-Looking Preferences.” Strulovici is grateful for financial support from National Science Foundation Grant 1151410 and a Sloan Research Fellowship, as well as for the hospitality of Microsoft Research, New England. Publisher Copyright: {\textcopyright} 2017 The Econometric Society",
year = "2017",
month = jul,
doi = "10.3982/ECTA13937",
language = "English (US)",
volume = "85",
pages = "1175--1218",
journal = "Econometrica",
issn = "0012-9682",
publisher = "Wiley-Blackwell",
number = "4",
}