TY  - JOUR
AU  - Bernheim,B. Douglas
TI  - Intergenerational Altruism and Social Welfare:  A Critique of the Dynastic Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2288
PY  - 1987
Y2  - June 1987
UR  - http://www.nber.org/papers/w2288
L1  - http://www.nber.org/papers/w2288.pdf
N1  - Author contact info:
B. Douglas Bernheim
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650/725-8732
Fax: 650/725-5702
E-Mail: bernheim@stanford.edu
AB  - In this paper, I show that, under relatively weak conditions, dynastic equilibria are never welfare optima. If a social planner sets policy to maximize a social welfare function, then, except in extreme cases where the planner cares only about a single generation, successive generations will never be linked through altruistically motivated transfers. This suggests that the dynastic model is unsuitable for normative analysis, and, to the extent governments actually behave in this manner, the model is also inappropriate for positive analysis. In addition, I show that, except in a few special cases, the planner's preferences are dynamically inconsistent. If the planner can successfully resolve this inconsistency, then the central result is somewhat modified.
ER  -