Intergenerational Altruism and Social Welfare: A Critique of the Dynastic Model / B. Douglas Bernheim.

Format:

Book

Author/Creator:

Bernheim, B. Douglas.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2288.

NBER working paper series no. w2288

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Intergenerational Altruism and Social Welfare

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1987.

Summary:

In this paper, I show that, under relatively weak conditions, dynastic equilibria are never welfare optima. If a social planner sets policy to maximize a social welfare function, then, except in extreme cases where the planner cares only about a single generation, successive generations will never be linked through altruistically motivated transfers. This suggests that the dynastic model is unsuitable for normative analysis, and, to the extent governments actually behave in this manner, the model is also inappropriate for positive analysis. In addition, I show that, except in a few special cases, the planner's preferences are dynamically inconsistent. If the planner can successfully resolve this inconsistency, then the central result is somewhat modified.

Notes:

Print version record

June 1987.