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Individual and social discounting in a viscous population

By Peter D. Sozou

Abstract

Social discounting in economics involves applying a diminishing weight to community-wide benefits or costs into the future. It impacts on public policy decisions involving future positive or negative effects, but there is no consensus on the correct basis for determining the social discount rate. This study presents an evolutionary biological framework for social discounting. How an organism should value future benefits to its local community is governed by the extent to which members of the community in the future are likely to be its kin. Trade-offs between immediate and delayed benefits to an individual or to its community are analysed for a modelled patch-structured iteroparous population with limited dispersal. It is shown that the social discount rate is generally lower than the individual (private) discount rate. The difference in the two rates is most pronounced, in ratio terms, when the dispersal level is low and the hazard rate for patch destruction is much smaller than the individual mortality rate. When decisions involve enforced collective action rather than individuals acting independently, social investment increases but the social discount rate remains the same

Topics: H Social Sciences (General), HV Social pathology. Social and public welfare. Criminology
Publisher: Royal Society
Year: 2009
DOI identifier: 10.1098/rspb.2009.0401
OAI identifier: oai:eprints.lse.ac.uk:28540
Provided by: LSE Research Online

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