Discounting by committee

Millner, Antony and Healey, Andrew (2018) Discounting by committee. Journal of Public Economics, 167. pp. 91-104. ISSN 0047-2727

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Abstract

We study a dynamic social choice problem in which a sequence of committees must decide how to consume a public asset. A committee convened at time t decides on consumption at t, accounting for the behaviour of future committees. Committee members disagree about the appropriate value of the pure rate of time preference, but must nevertheless reach a decision. If each committee aggregates its members' preferences in a utilitarian manner, the collective preferences of successive committees will be time inconsistent, and they will implement inefficient consumption plans. If however committees decide on the level of consumption by a majoritarian vote in each period, they may improve on the consumption plans implemented by utilitarian committees. Using a simple model, we show that this occurs in empirically plausible cases. Application to the problem of choosing the social discount rate is discussed.

Item Type:	Article
Official URL:	https://www.journals.elsevier.com/journal-of-publi...
Additional Information:	© 2018 The Authors © CC BY 4.0
Divisions:	Grantham Research Institute
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HN Social history and conditions. Social problems. Social reform
JEL classification:	D - Microeconomics > D6 - Welfare Economics > D60 - General D - Microeconomics > D7 - Analysis of Collective Decision-Making > D71 - Social Choice; Clubs; Committees; Associations D - Microeconomics > D9 - Intertemporal Choice and Growth > D90 - General
Date Deposited:	20 Sep 2018 11:05
Last Modified:	18 Apr 2024 18:15
Projects:	ES/K006576/1
Funders:	Economic and Social Research Council
URI:	http://eprints.lse.ac.uk/id/eprint/90246

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