Re: Market failure to sufficently weigh the future

From: Robin Hanson (
Date: Thu Nov 02 2000 - 11:48:13 MST

Hal Finney wrote:
> > I don't think it makes sense to talk about side effects of changing
> > discount rates, ... social discount rates are just a feature of
> > social preferences - and preferences don't have side effects, actions
> > do.
>But the authors do make policy suggestions. ...
>"Relative to the market evaluation, our analysis tips the scales in
>favor of policies with short run costs and long run benefits. ...
>subsidies to capital accumulation. ... low inflation. ... conservation."
>My complaint is that the authors have not shown that these suggestions
>will achieve their goal of better satisfying people's preferences.
>Making these changes may cause disruptions ...
>The burden of proof ought to be on those who propose policy changes
>to show that they will achieve their goal. ...

"Tips the scale" is a weak claim. They are just saying that all else
equal this makes such policies look a little better. Yes of course to
decide on a particular policy you have to consider all effects,
including "disruptions." On net none of these policies may be a good
idea, even when we realized that the social horizon is longer than the
individual horizon.

Robin Hanson
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326 FAX: 703-993-2323

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