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A biological theory of social discounting

Robson, Arthur J. and Szentes, Balázs (2014) A biological theory of social discounting. American Economic Review, 104 (11). pp. 3481-3497. ISSN 0002-8282

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Identification Number: 10.1257/aer.104.11.3481

Abstract

We consider a growth model in which intergenerational transfers are made via stocks of private and public capital. Private capital is the outcome of individuals' private savings while decisions regarding public capital are made collectively. We hypothesize that private saving choices evolve through individual selection while public saving decisions are the result of group selection. The main result of the paper is that the equilibrium rate of return to private capital is at least 2-3% more than the rate of return to public capital. In other words, social choices involving intertemporal trade-offs exhibit much more patience than individual choices do.

Item Type: Article
Official URL: https://www.aeaweb.org/aer/index.php
Additional Information: © 2014 American Economic Association
Divisions: Economics
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
H Social Sciences > HN Social history and conditions. Social problems. Social reform
JEL classification: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D71 - Social Choice; Clubs; Committees; Associations
D - Microeconomics > D9 - Intertemporal Choice and Growth > D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
H - Public Economics > H4 - Publicly Provided Goods > H43 - Project Evaluation; Social Discount Rate
Sets: Departments > Economics
Date Deposited: 19 Nov 2014 15:20
Last Modified: 20 Nov 2019 11:12
URI: http://eprints.lse.ac.uk/id/eprint/60197

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