Won't You Think of the Children?: Traits Predicting Intergenerational Preferences.

Won’t You Think of the Children?: Traits Predicting Intergenerational Preferences Christian C. Luhmann (christian.luhmann@stonybrook.edu) Department of Psychology, Stony Brook University Stony Brook, NY 11790 USA Sarah S. Pak (sarah.pak@princeton.edu) Department of Psychology, Princeton University Princeton, NY 08540 USA 2002 for a review of this literature), altruistic behavior has been observed in a range of contexts and across a variety of species (Piliavin & Charng, 1990). The dominant models suggest that altruism is highly dependent on reciprocity. That is, decision makers may act in order to achieve benefits for others, even at personal cost, if the beneficiaries may later return the favor. In the context of intergenerational dilemmas, however, reciprocity plays no obvious role. That is, decision makers in the present generation have no reason to behave altruistically towards future generations because future generations have neither an opportunity to reciprocate beneficial actions nor the means to retaliate for detrimental actions. In fact, according to traditional models of altruism, it is in the present generation’s best interest to make decisions that ignore the welfare of future generations. Abstract Individuals are frequently asked to make sacrifices in an attempt to produce benefits for future generations. Such decisions are referred to as intergenerational dilemmas. Previous research on intergenerational dilemmas has shown that situational manipulation of factors such as the delay between sacrifice and benefits and the perceived similarity with future others modulate intergenerational preferences. However, it is unclear whether there are traits that predict intergenerational preferences across a variety of dilemmas. Individual differences were quantified using econometric measures of delay discounting and social discounting. Results indicated that individual differences on these measures accounted for a significant portion of the variance observed in a broad measure of intergenerational preferences. Keywords: intergenerational choice, delay discounting, social discounting An Economic Perspective It is increasingly clear that many of our everyday actions not only have immediate consequences, but also have consequences for those in future generations. Decisions about such actions are somewhat peculiar in that a thorough evaluation requires considering the interests of individuals that do not yet exist. These decisions become even more complicated when they require short-term sacrifices on the part of the present generation in order to achieve benefits for (or to avoid harming) future generations. Decisions about such tradeoffs have been referred to as intergenerational dilemmas (e.g., Gardiner, 2006). Intergenerational dilemmas are frequently encountered in the context of policy-making and involve everything from global warming and overfishing to more mundane decisions about infrastructure investments. Occasionally, policy makers place will act on behalf of future generations. For example, Norway’s gasoline prices are among the world’s highest at $10.12 per gallon, resulting from taxes on fossil fuels designed to reduce global warming (Randall, 2012; Romero, 2005). However, due to a lack of political will, intergenerational dilemmas are often resolved in ways that favor the current generation. Intergenerational dilemmas are an example of a larger class of social dilemmas in which the interests of the decision maker are at odds with the interests of others. Despite the pervasive assumption of self-interested motives by economists (see Frederick, Loewenstein, & O’Donoghue, When contemplating intergenerational dilemmas at the policy level, economists are typically employed to produce cost-benefit analyses that are used to guide policy-making. When a policy’s consequences (either costs or benefits) extend over long time periods, these analyses are forced to specify exactly how current and future welfare are balanced. The strategy typically taken is to take the interests of future generations into consideration, but to a lesser extent than the interests of the current generation. The degree to which future consequences impact intergenerational choices is controlled by what is known as the social discount rate (Moore, Boardman, Vining, Weimer, & Greenberg, 2004). Assuming a social discount rate of ten percent, immediate consequences are considered to be twice as important as identical consequences that will occur in seven years and ten times greater than consequences that will occur in 14 years. For example, imagine a proposal to fix aging sewer systems. If the proposed legislation would cost $100 million dollars immediately, but would avert a potentially costly failure estimated to occur in 30 years, then the ultimate cost of the failure would have to exceed $2 billion in order to justify the immediate expenditure. These social discount rates can lead to potentially undesirable conclusions. For example, the ten percent discount rate suggests that the welfare of the current generation’s grandchildren (two generations or 50 years from now) will be valued at less than one percent of the