This will be fun, Beatrice. I remember working through the Ramsay paper some years ago -- not even knowing enough to realize how little I understood of it -- but still being struck by the no-discounting stipulation not making sense to me (as no-growthers' arguments don't make sense to me today) when the whole paper seemed to scream discounting. I couldn't tell whether his moral objections to it were serious or just a Cambridge-humor way of bracketing an issue until a framework was in place. It also seemed to me that later economists referred to "Ramsey model" only out the belief that the Arrow-Debreu-McKenzie findings justified their taking the discounted part of the paper as the whole show. A "representative agent," under the A-D-Mck restrictions, could stand for the whole economy.
Now you're going to make me read this paper again! Sigh. :-)
We make no claim of unpacking what Ramsey truly meant (Pedro does a bit of this in another paper with the greg Cheryl Misak (https://academic.oup.com/cje/article-abstract/46/1/41/6486774). Our goal here is to document how the ambiguities that you found in reading the 1928 paper never went away (even when some frameworks, optimal growth theory and other, were stabilized)
Ms. Cherrier, I congratulate you on this valuable and highly enjoyable series on the Ramsey Formula for discounting. I am reading each post in this series with great interest, and learning a lot -- thank you! Some of the ancillary material you have included is also quite delightful. The letter from Koopmans, Nordhaus and Litan (as part of their CONAES effort) to Ken Arrow is just mind blowing (at least to me, it is!). I always stood in awe of the great Arrow, but now I think of him as a god!
Just one small quibble about this post. You write -- "To illustrate: $1,000 cost or benefit in 20 years is worth $360 today at a 5% discount rate, $149 at 10%." When I perform the appropriate math, I get $377 at a 5% discount rate; you are right, at a 10% rate, I do get $149 as well. Am I missing something, or did you just make a boo-boo with the $360?
This will be fun, Beatrice. I remember working through the Ramsay paper some years ago -- not even knowing enough to realize how little I understood of it -- but still being struck by the no-discounting stipulation not making sense to me (as no-growthers' arguments don't make sense to me today) when the whole paper seemed to scream discounting. I couldn't tell whether his moral objections to it were serious or just a Cambridge-humor way of bracketing an issue until a framework was in place. It also seemed to me that later economists referred to "Ramsey model" only out the belief that the Arrow-Debreu-McKenzie findings justified their taking the discounted part of the paper as the whole show. A "representative agent," under the A-D-Mck restrictions, could stand for the whole economy.
Now you're going to make me read this paper again! Sigh. :-)
We make no claim of unpacking what Ramsey truly meant (Pedro does a bit of this in another paper with the greg Cheryl Misak (https://academic.oup.com/cje/article-abstract/46/1/41/6486774). Our goal here is to document how the ambiguities that you found in reading the 1928 paper never went away (even when some frameworks, optimal growth theory and other, were stabilized)
Ms. Cherrier, I congratulate you on this valuable and highly enjoyable series on the Ramsey Formula for discounting. I am reading each post in this series with great interest, and learning a lot -- thank you! Some of the ancillary material you have included is also quite delightful. The letter from Koopmans, Nordhaus and Litan (as part of their CONAES effort) to Ken Arrow is just mind blowing (at least to me, it is!). I always stood in awe of the great Arrow, but now I think of him as a god!
Just one small quibble about this post. You write -- "To illustrate: $1,000 cost or benefit in 20 years is worth $360 today at a 5% discount rate, $149 at 10%." When I perform the appropriate math, I get $377 at a 5% discount rate; you are right, at a 10% rate, I do get $149 as well. Am I missing something, or did you just make a boo-boo with the $360?
Please keep up the good work!