What Is the Natural Weight of the Current Old?


We consider a simple overlapping generations model with an externality à la Arrow-Romer [1,2] and a government with fiscal powers. If it wishes to maximize a criterion depending on the lifelong utility of agents, is there a natural weight for the utility of the current old? We show in a simple example that this weight depends on the specific features of the model, in particular the length of the horizon, and cannot be chosen arbitrarily. Our result has a neat economic interpretation [2].

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D. Gaumont and D. Leonard, "What Is the Natural Weight of the Current Old?," Theoretical Economics Letters, Vol. 3 No. 5, 2013, pp. 257-261. doi: 10.4236/tel.2013.35043.

Conflicts of Interest

The authors declare no conflicts of interest.


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