A Theory of Intergenerational Altruism

Simone Galperti, Bruno Strulovici

Research output: Contribution to journalArticlepeer-review

14 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)1175-1218
Number of pages44
JournalEconometrica
Volume85
Issue number4
DOIs
StatePublished - Jul 2017

Keywords

  • Pure altruism
  • intergenerational welfare
  • nonpaternalistic altruism
  • present bias
  • quasi-hyperbolic discounting
  • time inconsistency
  • welfare criterion

ASJC Scopus subject areas

  • Economics and Econometrics

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