Sustainability and intertemporal equity: a multicriteria approach

In (macro) economics literature, the need to consider sustainability and intertemporal equity issues leads to propose different criteria (discounted utilitarianism, green golden rule, Chichilnisky criterion) in order to define social welfare. We compare and assess the outcomes associated to such alternative criteria in a simple macroeconomic model with natural resources and environmental concern (Chichilnisky et al. in Econ Lett 49: 174-179, 1995), by relying on a multicriteria approach. We show that among these three criteria, the green golden rule (discounted utilitarianism) yields the highest (lowest) welfare level, while the Chichilnisky criterion leads to an intermediate welfare level which turns out to be increasing in the weight attached to the asymptotic utility. These results suggest that completely neglecting finite-time utilities and focusing only on the asymptotic utility is not only more sensible from a sustainability point of view but also from a social welfare maximization standpoint.