Social time preference |
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Authors: | Giancarlo Marini Pasquale Scaramozzino |
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Institution: | Dipartimento di Economia e Istituzioni, Università di Roma ?Tor Vergata?, via di Tor Vergata s.n.c., 00133 Roma, Italy. (Fax: +39-06-2020-500; e-mail: Giancarlo.Marini@UniRoma2.It), IT Centre for Financial and Management Studies, SOAS, University of London, Thornhaugh Street, London WC1H 0XG, UK. (Fax: +44-20-7637-7075; e-mail: PS6@soas.ac.uk), GB
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Abstract: | The observed practice of discounting the future should not be rationalised on the grounds of myopia or selfishness. A positive
rate of pure time preference is necessary to ensure that heterogeneous generations are treated in an egalitarian fashion.
A zero social discount rate would yield intertemporal allocations which are biased against the current generations. Endogenous
productivity growth requires that the social discount rate be set above the subjective rate of pure time preference. Positive
social time preference, far from discriminating against future generations, is essential for a fairer intertemporal allocation
of resources.
Received: 3 July 1999/Accepted: 6 October 1999 |
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Keywords: | JEL classification: 43 |
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