I SPECIFICALLY had no children based on the premise of being Self Sufficient until I die. So YOUR children or THEIR children mean NOTHING to me. As a matter of fact, I'd be perfectly comfortable REMOVING ANY child or mother or father who seek to disenfranchise me. 😑 Just sayn 🤗
Where do estate taxes fall here? It seems like a way of taxing a person at their oldest possible point. Conversely, not having them seems like a way to have private consumption become even further into the future than an individual lifespan.
I think the "normative" discount rate (the one that everyone should use) can only be 0 for experiantial utility. This argument is valid even if money should be discounted, as money doesn't give me experiental utility, but opportunity to buy it, and the earlier the money, the more opportunity I have. This argument is also valid if you observe experiments where people want an apple rather now than next year (because of trust issues as mentioned in your cited paper). Additionally, the reason I said "normative", is because people make mistakes by overvaluing the present which results in observed discount rates. If we assume interpersonal comparisons with future generations, this does not neccesarily mean we should mitigate climate change or existential threats all the times like crazy, as you can assume concave utility and future generations will be much happier in general and any marginal improvement in their life will be almost infinite times less than improvement in mine.
This is what Frank Ramsey (who developed the first temporal utility model) wrote on the topic in his paper in 1928: “It is assumed that we do not discount later enjoyments in comparison with earlier ones, a practice which is ethically indefensible and arises merely from the weakness of the imagination.”
For long-term decisions, we really need to distinguish the social rate of time preference from the opportunity cost of capital investment. We should also take account of the fact that (hopefully) those future consumers will be far richer on average than we so their consumption should count for less than ours.
if im interpreting table 9 right in the Busse et al paper the discount rates dont seem ludicrously high. Leaving out the negative(!) ones, the discount rates implied by new car prices are mostly around 0-6% unless demand elasticity is assumed very large. Higher discount rates implied by used car prices maybe rationalizable by credit constraints as you suggest
Really enjoyed this. Important stuff.
I SPECIFICALLY had no children based on the premise of being Self Sufficient until I die. So YOUR children or THEIR children mean NOTHING to me. As a matter of fact, I'd be perfectly comfortable REMOVING ANY child or mother or father who seek to disenfranchise me. 😑 Just sayn 🤗
Where do estate taxes fall here? It seems like a way of taxing a person at their oldest possible point. Conversely, not having them seems like a way to have private consumption become even further into the future than an individual lifespan.
I think the "normative" discount rate (the one that everyone should use) can only be 0 for experiantial utility. This argument is valid even if money should be discounted, as money doesn't give me experiental utility, but opportunity to buy it, and the earlier the money, the more opportunity I have. This argument is also valid if you observe experiments where people want an apple rather now than next year (because of trust issues as mentioned in your cited paper). Additionally, the reason I said "normative", is because people make mistakes by overvaluing the present which results in observed discount rates. If we assume interpersonal comparisons with future generations, this does not neccesarily mean we should mitigate climate change or existential threats all the times like crazy, as you can assume concave utility and future generations will be much happier in general and any marginal improvement in their life will be almost infinite times less than improvement in mine.
This is what Frank Ramsey (who developed the first temporal utility model) wrote on the topic in his paper in 1928: “It is assumed that we do not discount later enjoyments in comparison with earlier ones, a practice which is ethically indefensible and arises merely from the weakness of the imagination.”
For long-term decisions, we really need to distinguish the social rate of time preference from the opportunity cost of capital investment. We should also take account of the fact that (hopefully) those future consumers will be far richer on average than we so their consumption should count for less than ours.
if im interpreting table 9 right in the Busse et al paper the discount rates dont seem ludicrously high. Leaving out the negative(!) ones, the discount rates implied by new car prices are mostly around 0-6% unless demand elasticity is assumed very large. Higher discount rates implied by used car prices maybe rationalizable by credit constraints as you suggest
I erred, sorry.
the heckman estimates are huge though