Cross-dynastic Intergenerational Altruism
Decisions with long-term consequences require comparing utility derived from present consumption to future welfare. But can we infer socially relevant intertemporal preferences from saving behavior? I allow for a decomposition of the present generation’s preference for the next generation into its dynastic and cross-dynastic counterparts, in the form of welfare weights on the next generation in the own dynasty and other dynasties. Welfare weights on other dynasties can be motivated by a concern for sustainability, or if descendants may move or marry outside the dynasty. With such cross-dynastic intergenerational altruism, savings for one’s own descendants benefit present members of other dynasties, giving rise to preference externalities. I find that socially relevant intertemporal preferences may not be inferred from saving behavior if there is cross-dynastic intergenerational altruism. I also show that the external effect of present saving decreases over time. This means that intertemporal preferences inferred from saving behavior are time-inconsistent, unless cross-dynastic intergenerational altruism is accounted for.
Date: 2 December 2019, 11:15 (Monday, 8th week, Michaelmas 2019)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room E
Speaker: Frikk Nesje (University of Heidelberg)
Organising department: Department of Economics
Organiser: Rossa O'Keeffe-O'Donovan (University of Oxford)
Organiser contact email address: gpi-office@philosophy.ox.ac.uk
Topics:
Booking required?: Not required
Audience: Members of the University only
Editor: William Jefferson