A Biological Theory of Social Discounting

We consider a growth model in which intergenerational transfers are made via stocks of private and public capital Private capital is the outcome of individuals' private savings while decisions regarding public capital are made collectively. We hypothesize that private saving choices evolve thro...

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Bibliographic Details
Published in:The American economic review 2014-11, Vol.104 (11), p.3481-3497
Main Authors: Robson, Arthur J., Szentes, Balázs
Format: Article
Language:English
Subjects:
Asexuality
Capital
Capital investments
Children
Discount rates
Economic statistics
Economic theory
Economics
Equilibrium
Equilibrium theory
Group selection
Growth models
Intergenerational relations
Investment return rates
Marginal products
Population growth
Population growth rate
Preferences
Private savings
Public capital
Public investments
Savings
Studies
Trade-off
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Summary:We consider a growth model in which intergenerational transfers are made via stocks of private and public capital Private capital is the outcome of individuals' private savings while decisions regarding public capital are made collectively. We hypothesize that private saving choices evolve through individual selection while public saving decisions are the result of group selection. The main result of the paper is that the equilibrium rate of return to private capital is at least 2-3 percent more than the rate of return to public capital. In other words, social choices involving intertemporal trade-offs exhibit much more patience than individual choices do.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.104.11.3481