The MBR intertemporal choice criterion and Rawls’ just savings principle

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5 November 2016
By CEE-M

This paper provides general theorems about the control that maxi- mizes the mixed Bentham-Rawls (MBR) criterion for intergenerational justice, which was introduced in Alvarez-Cuadrado and Long (2009). We establish su¢ cient concavity conditions for a candidate trajectory to be optimal and unique. We also show that the state variable is monotonic un- der rather weak conditions. And …nally we prove that inequality among generations, captured by the gap between the poorest and the richest generations, is lower when optimization is performed under the MBR cri- terion rather than under the discounted utilitarian criterion. The two last properties are in line with some aspects of the rawlsian just savings principle.