I do it regularly, though it does not show itself up on the site very much. Had I a different readership and different students I might just show my work, here is one case where I will.
When it comes to environmental policy an issue which comes up regularly is, “how do we account for the preferences of people in the future?” Abstracting from the idea of discount rates and all that, think about the question from a “who and what enters the calculation” aspect. In popular circles, it appears that the assumption is that future generations will value the environment as much as we claim we do today.
Now I have no idea if this is true, nor do you. And because I make claims like, “we don’t know if future generations might despise the environment and love pavement” does not mean that I myself oppose certain environmental policy. I make this idea explicit because it makes for an intellectually honest presentation of a dynamic cost-benefit decision – and especially since there will be a time when one finds oneself on the “wrong” side of popular opinion on some issue, and this would be useful to keep in mind.
However, I DO have reason to believe that future generations will value the environment differently than current ones. If you take the economic (and visual) evidence seriously that “richer is greener” (in ecospeak, we know the income elasticity of demand for environmental quality is well over 1), and you also are persuaded by my continual contentions that we are super-rich now, and we are very likely to continue to get richer, then the following should be obvious:
- Future generations (the world around) are likely to be richer, perhaps substantially so
- Richer people, at the margin, spend more on environmental amenities than poorer ones
- Therefore future generations will value (at the margin) environmental amenities and quality greater than current ones.
I myself have made public statements to the effect of, “future generations will be much richer, so it is odd that we will sacrifice huge amounts of current income for their benefit.” But that comment leaves out the likelihood that preferences indeed will change, and change in a way that we might reasonably be able to pick. The upshot is that if you are a wealth optimist (which many classical liberals seem to be) then that also suggests that you lower your implied discount rate on environmental valuation projects. I certainly have done this in my head. But my opposition to some (many) environmental policies and programs does not rest on the (tenuous) assumption that future generations may not care much about the environment. Regular readers will understand where those suspicions come from. In case you need a sneak preview of a future post – we already have a federal government spending $3.5 trillion per year, and it cannot even manage to provide simple and basic levels of health care to all people, especially when we are told that there is perhaps no more important human rights issue in a country as rich as ours.
