Social time preference

The observed practice of discounting the future should not be rationalised on the grounds of myopia or selfishness. A positive rate of pure time prefe rence is necessary to ensure that heterogeneous generations are treated in an egalitarian fashion. A zero social discount rate would yield intertempor al allocations which are biased against the current generations. Endogenous productivity growth requires that the social discount rate be set above th e subjective rate of pure time preference. Positive social time preference, far from discriminating against future generations, is essential for a fai rer intertemporal allocation of resources. JEL classification: 43.