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Post by Sapphire Capital on Nov 26, 2008 21:46:50 GMT 4
Policymaking for Posterity Lawrence H. Summers Harvard University; National Bureau of Economic Research (NBER) Richard J. Zeckhauser Harvard University - John F. Kennedy School of Government; National Bureau of Economic Research (NBER) September 10, 2008 HKS Working Paper No. RWP08-040 Harvard Law School Program on Risk Regulation Research Paper No. 08-2 Abstract: Policymaking for posterity involves current decisions with distant consequences. Contrary to conventional prescriptions, we conclude that the greater wealth of future generations may strengthen the case for preserving environmental amenities; lower discount rates should be applied to the far future, and special effort should be made to avoid actions that impose costs on future generations. Posterity brings great uncertainties. Even massive losses, such as human extinction, however, do not merit infinite negative utility. Given learning, greater uncertainties about damages could increase or decrease the optimal level of current mitigation activities. Policies for posterity should anticipate effects on: alternative investments, both public and private; the actions of other nations; and the behaviors of future generations. Such effects may surprise. This analysis blends traditional public finance and behavioral economics with a number of hypothetical choice problems. papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1266220_code170891.pdf?abstractid=1266220&mirid=1
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