NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Collective Intertemporal Choice: the Possibility of Time Consistency

Antony Millner, Geoffrey Heal

NBER Working Paper No. 22524
Issued in August 2016
NBER Program(s):Environment and Energy Economics, Public Economics, Political Economy

Recent work on collective intertemporal choice suggests that non-dictatorial social preferences are generically time inconsistent. We argue that this claim conflates time consistency with two distinct properties of preferences: stationarity and time invariance. While the conjunction of time invariance and stationarity implies time consistency, the converse does not hold. Although social preferences cannot be stationary, they may be time consistent if time invariance is abandoned. If individuals are discounted utilitarians, revealed preference provides no guidance on whether social preferences should be time consistent or time invariant. Nevertheless, we argue that time invariant social preferences are often normatively and descriptively problematic.

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Document Object Identifier (DOI): 10.3386/w22524

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