Inequality and Social Discounting
Bibliographic Data
| ID | 10171013 |
|---|---|
| Authors | Emmanuel Farhi (0000-0002-8508-8106, Harvard University Press), Iván Werning (Massachusetts Institute of Technology) |
| Year | 2007 |
| Volume | 115 |
| Issue | 3 |
| Pages | 365-402 |
| Publication date | 2007-06-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/518741 |
| OpenAlex | W2134788425 |
| Language | EN |
| Citations received | 9 |
| References cited | 9 |
We explore steady-state inequality in an intergenerational model with altruistically linked individuals who experience privately observed taste shocks. When the welfare function depends only on the initial generation, efficiency requires immiseration: inequality grows without bound and everyoneâ€TMs consumption converges to zero. We study other efficient allocations in which the welfare function values future generations directly, placing a positive but vanishing weight on their welfare. The social discount factor is then higher than the private one, and for any such difference we find that consumption exhibits mean reversion and that a steady-state, cross-sectional distribution for consumption and welfare exists, with no one trapped at misery
Consumption (sociology · Demographic economics · Discounting · Distribution (mathematics · Econometrics · Economics · Function (biology · Inequality · Market economy · Mathematical analysis · Microeconomics · Sociology · Steady state (chemistry · Welfare · Welfare economics · Economic theories and models · Finance · Financial Literacy, Pension, Retirement Analysis · Fiscal Policy and Economic Growth · Mathematics
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| Unique citing works | 9 |
|---|---|
| Citations per year | 0,64 |
| Citation span | 2012 - 2024 (13) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 8 |