Intergenerational justice and the social discount rate

This paper applies the Harsanyi social welfare function to the problem of determining the social discount rate. It thus views the social discount question as one of justice between generations under conditions of individual uncertainty over position, rather than as one generation's paternalism or altruism for the next generation. Whether there is an accumulation of capital for future generations is shown to depend on the form of the individual (or collective) utility function. More importantly, the approach lends some insight into the kind of institutional structure which should be used to determine the social discount rate.This paper was written while the author was a postdoctoral fellow at the Center for Study of Public Choice at Virginia Polytechnic Institute and State University. Helpful comments were received on an earlier draft from James M. Buchanan, Pierre Pestieau, and Robert D. Tollison.