The Question of Intergenerational Equity

Until now, the approach we’ve used to study the interactions between different actors in Tragedy of the Commons or environmental externalities problems has been non-cooperative game theory.  The term “non-cooperative” means that there is no mechanism for enforcement of contracts within the game, so players are not incentivized by penalties or punishment to work collectively — although they may choose to work generously together for moral or religious reasons, or purely out of an enlightened self interest.  For example, in a repeated game, the players might realize that a little cooperation in the early rounds can build trust that pays off in later rounds.

In this video, Richard Dawkins explains a computer programming competition to see which strategy — cooperating or defecting or some combination thereof — would be the most successful in a repeated Prisoners Dilemma game.  Sure enough, the “nice” program Tit for Tat  was the most successful of all strategies.  In fact, nice strategies generally did better than selfish strategies, largely because they can expect to encounter other “nice” strategies willing to consider mutual cooperation.

This view of enlightened self-interest, in which spontaneous cooperation is rewarded, is most common when the parties can:

  1. communicate with each other,
  2. identify strongly with each other, especially in opposition to other groups,
  3. reciprocate with each other, and
  4. feel the consequences of failing to cooperate almost immediately.

In most situations, these conditions could be met in theory but might be difficult to realize in practice.

However,there is one problem in which it is impossible for at least three of these conditions to be met at all: climate change.

Because the effects of climate change are gradual and delayed, the individuals most responsible for the problem are unlikely to feel consequences that happen so far in the future that those most impacted have not yet been born.  Thus, there can be no communication, no reciprocity, only a remote sense of consequences, and identification is contingent upon fuzzy notions of protecting unborn great grandchildren.  In other words, the usual mechanisms for effecting collective action via enlightened self-interest are, in the special case of climate change, inaccessible.

This raises the question of what, if anything, present generations owe to the future.  If current behaviors are so damaging to the well-being of future generations that their quality of life has been severely constrained, then it can certainly be said that future people have been harmed.  Because it is reasonable to expect that future people should have the same opportunities to pursue happiness as we at present, moral sensitivity demands consideration of that harm.  This has been called the problem of Intergenerational Equity.

The Future Ain’t What it Used to Be

The traditional economic approach to problems of inter-temporal equity is to compare the value of future events to those of the present by discounting the future — i.e., counting future benefits less when comparing them to benefits available now.  Thus, the promise of $2 ten years from now might be considered worth giving up only $1 today.

There are several reasons to take this approach, including:

  1. The necessity of compensating promise holders (who accept deferred compensation) for the risk that they might never get paid at all.  To accept present sacrifices, promise holders want a larger payoff in the future.
  2. The necessity of compensating promise holders for the opportunity costs of deferring compensation when, if they had collected earlier, they might have earned interest on the money by lending it to someone else.
  3. The natural preference for people to prefer early payments rather than late.

The implication is that deferring compensation involves near-term sacrifice for long-term gain.  The result can feel like torture, but ultimately leads to success.

Nonetheless, for very long-term problems, even this approach of inter-temporal discounting fails to encompass long-term problems of sustainability, given the reality that sacrifices will be required of people who will never be able to reap the benefits.  Consequently, the question of intergenerational equity can only be understood as a moral problem, and not a problem of enlightened self-interest.  While the present generation can constrain the resources and the alternatives available in the future, the future generation has no recourse, no voice, and no ability to impact the fortunes of the present.  Given the absence of interaction between the generations, there is no way that the problem of intergenerational equity can be resolved by cooperation between generations.

In this video, Chilean economist Manfred Max-Neef argues that self-interest among political leaders works against resolution of long-term problems.  Moreover, he feels powerless to act in concert with others, even within the structure of the World Futures Council, a non-governmental organization found explicitly for the purpose of advancing the interests of future generations (whatever those might be).

Weak vs. Strong Sustainability

There are currently two arguments that attempt to resolve the question of what moral obligation the present generation might have to future generations.  The first of these is called strong sustainability and it holds that resources and management alternatives should be conserved for future generations in kind.  The second is weak sustainability, which is more optimistic about the capacity for future generations to be able to meet their own needs by discovering substitutes for depleted resources.  For example, a strong sustainability argument would prohibit whaling on the scale with which it was pursued in the mid-19th century, nearly driving whales to global extinction.  However, the weak sustainability argument says that it is natural and efficient to use the highest quality, most accessible resources first, and invest a portion of those resources in new discoveries that will provide a high quality of life when the best resources are depleted.  In an economic sense, petroleum from oil drilling provided a substitute for whale oil as a lubricant and in lamps, thereby sparing the remaining whales and enabling greater gains in the quality of life (at least for many humans).

Whereas the strong sustainability argument is easy to implement in that it requires only an understanding of present resources, rather than knowledge of  future discoveries that may or may not come to pass, the strong sustainability view requires much greater sacrifices than the weak in the present day.  The weak sustainability approach is more  tempting, but still demands an answer to the question, “What, specifically, is owed to the future?”

The answer provided by Nobel laureate economist Robert Solow is simple: knowledge.

In particular, Solow argues that the present should be making sacrifices in their level of consumption to fund research that discovers new resources or makes application of remaining resources to human needs more efficient.  In Solow’s view, it is morally satisfactory to be using up all the petroleum so long as we invest in hybrid cars or other technologies that will allow future generations to enjoy the benefits of the fuel, even if they have less fuel to go around.  Thus, the moral tension for Solow is in the difficulty of weighing the needs of the present-day poor, who might benefit from welfare programs, and the future poor, who no doubt need the resources that might have been spent on welfare to be invested in research and development instead.

One interesting aspect of Solow’s argument relates back to externalities.  Because knowledge can never be used up, like petroleum or fish, knowledge is not a rivalrous good.  One person’s use of knowledge does not necessarily keep others from using the same knowledge.  Therefore, research that generates new knowledge typically results in positive externalities, meaning that there are spill-over benefits to parties that did not invest in the research at all.  This is exactly the opposite problem of negative externalities caused by pollution, but also creates a new moral dilemma called the free rider problem, where the best possible strategy for any one individual would be to let others make the sacrifices necessary to perform basic research, but still enjoy the benefits of such research by reaping the positive externalities.  As we have seen before, in a free rider problem, what is optimal at the scale of the individual is tragic at the scale of society as a whole.

2 thoughts on “The Question of Intergenerational Equity

  1. Pingback: | XSET Blog

  2. I just had a quick conversation on LinkedIn about the Intergenerational Equity post that I think is appropriate to share here:

    On 10/24/12 4:47 AM, Xanthe Matychak, MFA wrote:
    intergenerational post is really great. one thing i wonder, though, is how are we supposed to care for future generations when we dont care all that much about people living on earth now? You must get this question a lot. Would love to know your response.

    On 10/24/12 6:16 AM, Thomas P Seager wrote:
    One powerful rationalization is to say that people today have to take responsibility for themselves. I.e., we care, but there’s nothing we can do to help people whom we hold accountable for the condition of their lives. By contrast, future people could not possibly be held accountable — they are still innocent, so to speak, and therefore deserving of moral consideration.

    I’m not saying that I buy into this. I’m saying I hear that narrative — it’s like Romney’s 47% remarks.

    On 10/24/12 7:05 AM Xanthe Matychak, MFA wrote:
    Yeh, I dont buy into it either. But it’s a good argument to have up one’s sleeve. Thanks, Thom.


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