The Irrelevance of Intergenerational Altruism for Social Discounting

Abstract

Should people's concern for the wellbeing of their descendants affect policy decisions? I consider a model in which people's dynastic utilities depend on the consumption of their descendants. The social welfare function is a discounted sum of past, present and future dynastic utilities. I establish that, when the social welfare function places suffcient weight on the dynastic utilities of future generations, intergenerational altruism has only negligible effects on the social ranking, and can be mostly ignored for the purpose of policy decisions. The reason is that, given persistant population growth, each generation's concern for its children roughly cancels out with their parents' concern for them.