RSS | Nicolas Treich “Consumption, Risk and Prioritarianism”
Prof. Nicolas Treich, Director of Research at INRA Toulouse, will be the speaker at this event. Nicolas will be presenting his paper entitled “Consumption, Risk and Prioritarianism” co-authored with Matthew D. Adler.
In this paper, we study consumption decisions under risk assuming a “prioritarian” social welfare function. This leads to a distinction between ex ante and ex post prioritarian consumption rules. Under standard assumptions, there is always more current consumption under ex ante prioritarianism than under utilitarianism. Thus, a concern for equity (in the ex ante prioritarian sense) means less concern for the risky future. In contrast, there is usually less current consumption under ex post prioritarianism than under utilitarianism. We discuss the robustness of these optimal consumption rules to learning, and to more general forms of prioritarianism.
The full paper can be viewed here.