Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 08/2005: A new equity condition for infinite utility streams and the possibility of being Paretian

Geir B. Asheim () and Bertil Tungodden ()
Additional contact information
Geir B. Asheim: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Bertil Tungodden: Department of Economics, Norwegian School of Economics and Business Administration, Postal: Hellev. 30, NO-5045 Bergen, Norway

Abstract: We investigate the properties of a new equity condition, "Hammond Equity for the Future" (HEF), capturing the following ethical intuition: A sacrifice by the present generation leading to a uniform gain for all future generations cannot lead to a less desirable utility stream if the present remains better off than the future. Since HEF is a weak condition when compared to other consequentialist equity conditions, it is of interest to establish whether it to a greater extent can be combined with Paretian conditions. We show that this is not the case: HEF is not compatible with the "Strong Pareto" condition when social preferences are upper semi-continuous in the sup norm topology. If we impose that the social preferences are complete, transitive and continuous in the sup norm topology, and satisfy an "Independent future" condition, then HEF cannot even be combined with the "Weak Pareto" condition.

Keywords: Intergenerational equity; Pareto condition

JEL-codes: D63; D71; Q01

14 pages, April 21, 2005

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