Showing papers by "Kenneth J. Arrow published in 1999"

Discounting, Morality, and Gaming

Abstract: 24 December 1996EMF-RFF Conferenceon DiscountingDISCOUNTING, MORALITY, AND GAMING Kenneth J. Arrow1. IntroductionI take the problem of discounting for projects with payoffs inthe far future (climate change, nuclear waste disposal) to belargely ethical (Schelling 1995). There is an apparent conflict inour moral intuitions, already apparent in Ramsey's work (1928).On the one hand, moral considerations are based onuniversalizability, in which case we should treat future generationsas we would ourselves, so that the pure rate of pure timepreference should be zero. But with zero time preference and along horizon, the savings rates become inordinately high, possiblyapproaching one as the horizon goes to infinity (Koopmans 1960).A reconciliation must be based on the notion that individuals arenot morally required to subscribe fully to morality at any cost tothemselves. There are both empirical evidence and theoreticalarguments that individuals recognize moral arguments for the farfuture but treat themselves and the near future better (Cropper,Aydede, and Portney 1994; Chichilnisky 1996). This approachleads to a non-cooperative game, in which each generation issomewhat selfish (compared with perfect morality) and recognizesthat future generations will be similarly selfish. I thus come back

The economics of information

Abstract: 1. Bayes and Minimax Solutions of Sequential Decision Problems 2. Admissible Points of Convex Sets 3. Statistics and Economic Policy 4. Decision Theory and Operations Research 5. Decision Theory and the Choice of a Level of Significance for the t-Test 6. Insurance, Risk, and Resource Allocation 7. Statistical Requirements for Greek Economic Planning 8. The Economics of Moral Hazard: Further Comment 9. The Value of and Demand for Information 10. Higher Education as a Filter 11. Information and Economic Behavior 12. Limited Knowledge and Economic Analysis 13. On the Agenda of Organizations 14. Vertical Integration and Communication 15. Risk Allocation and Information: Some Recent Theoretical Developments 16. The Property Rights Doctrine and Demand Revelation under Incomplete Information 17. Allocation of Resources in Large Teams 18. On Partitioning a Sample with Binary-Type Questions in Lieu of Collecting Observations Index

Inter-Generational Equity and the Rate of Discount in Long-Term Social Investment

Abstract: The importance of the correct choice of discount rate for social (or indeed individual) investments hardly needs elaboration. In the social context, the discount rate is, at least in part, an expression of concerns about equity between the present and future generations and among future generations. I say, in part, because it also expresses both an expectation of the rates of return available to future generations in alternative uses of capital and an expectation of the growth of income of the representative individual.

Amartya K. Sen's Contributions to the Study of Social Welfare

Abstract: The oeuvre of Amartya K. Sen is very considerable in magnitude, nearly twenty books (with two forthcoming) and about 250 articles, mostly in learned journals but also in the higher level of the popular press, and lectures. It has nevertheless a very considerable degree of unity. It is motivated throughout by concern for the welfare of the individuals in an economy, with special interest in the lower part of the income spectrum; starvation, poverty, and economic development have been the objects of fruitful, important, and socially valuable study and have motivated his basic research into the concepts of individual and social welfare. All of this work is of very high quality and makes important contributions to our understanding and to the formation of policy. But I will isolate for special consideration that large subset which revolves about the conceptual question: what is meant by, "better off socially"? A major portion of his work falls directly into this category. The value of Sen's analysis of social welfare and the conceptual questions relevant to it have now been recognized by the award of the Nobel Memorial Prize in Economic Science. Unlike some other work which has been awarded this Prize, especially in economic theory, we cannot do justice to Sen's work in social welfare on the basis of one or two seminal papers, although there have been several such, as I will point out. Rather it is the work as a whole and the way the various parts interplay that must be understood to see the importance of Sen's contribution. His exploration of the notions of social welfare takes place at every level of analysis, formal-mathematical, conceptual, and empirical. It is by far the most comprehensive study of its kind, drawing on profound understanding of both economics and moral philosophy. It is useful to note that he is regarded by philosophers as one of their leading lights, and he has published extensively in philosophical journals. In view of the comprehensive and far-flung nature of his work, it is not surprising that his role has been somewhat different in various specific aspects. In some, indeed, he has opened and defined new fields with strong results. In others, he has perfected and enriched earlier results or contributed along with others. In still others, he has raised new inquiries whose chief value has been the stimulation to others. What is striking is the consistency

Inter-Generational Equity and the Rate of Discount in Long-Term Social Investment

Abstract: The importance of the correct choice of discount rate for social (or indeed individual) investments hardly needs elaboration. In the social context, the discount rate is, at least in part, an expression of concerns about equity between the present and future generations and among future generations. I say, in part, because it also expresses both an expectation of the rates of return available to future generations in alternative uses of capital and an expectation of the growth of income of the representative individual.

Science over politics.

Abstract: Last month, 70 members of the U.S. Congress, including Henry Hyde, Chairman of the House Judiciary Committee, and J. C. Watts Jr. Republican Conference Chairman, signed a letter urging the federal government to ban all research on stem cells obtained from human embryos and fetuses. The letter calls upon the U.S. Department of Health and Human Services (DHHS) to reverse National Institutes of Health (NIH) Director Harold Varmus's decision to allow funding of pluripotent stem cell research. The lawmakers object “in the strongest possible terms” to Varmus's decision, as well as to the memorandum issued in January by DHHS General Counsel Harriet Rabb, which served as the legal basis for Varmus's position. In their letter, the members of Congress state, “Any NIH action to initiate funding of such research would violate both the letter and spirit of the federal law banning federal support for research in which human embryos are harmed or destroyed.” Federal laws and regulations, they claim, have protected human embryos and fetuses “from harmful experimentation at the hands of the Federal government” for more than two decades. “This area of law has provided a bulwark against government's misuse and exploitation of human beings in the name of medical progress. It would he a travesty for this Administration to attempt to unravel this accepted ethical standard.”

Team Theory and Distributed Processing: Surprise Attack

Abstract: It is argued that team theory is the appropriate analytic tool for studying distributed processing. It is shown that the so-called “surprise attack paradox” disappears when approached from a team-theory viewpoint.