Perfect Altruism Breeds Time Consistency

Antoine Billot , Xiangyu Qu (1)

1 CES - Centre d'économie de la Sorbonne

Public policies should be analyzed through social lifetime utility. This paper focuses on the general process, namely, aggregation rules, that makes these policies socially acceptable to individuals through their own discount factors and instantaneous utilities. We show that perfect altruism via an adapted form of unanimity is the key condition helping to characterize a time-consistent social planner concerned with intergenerational fairness in the presence of individuals who are heterogeneous in discount factors and instantaneous utilities. In addition, different intensity levels of altruism are proven to provide different forms of aggregated social discounting and instantaneous utility, these forms giving rise to several lifetime utilities, from the standard exponential discounted function to the quasi-hyperbolic and the k-hyperbolic functions. Moreover, by demonstrating that the degree of social present bias can be regulated by the choice of the number of periods involving altruism through unanimity, new insights emerge and potentially overturn some of the most standard economic policy recommendations.

Domains: Humanities and Social Sciences

Antoine Billot, Xiangyu Qu. Perfect Altruism Breeds Time Consistency. 2021. ⟨hal-03195888⟩