MAR 10 1974

HARVARD UNIVERSITY
PROJECT ON EFFICIENCY OF DECISION MAKING IN ECONOMIC SYSTEMS

TerepHone (617) 495-4587/4588 1737 Camsrince Street, Room 401
: Camsrince, Massacnusetts 02138

March 8, 1971

Professor Joshua Lederberg
Dept. of Genetics

Stanford University
Stanford, California 94305

Dear Joshua:

In your note of January sixth you asked for some references
concerning long-range discounting and a particular discounting for
future generations. Oh, a good deal of ink has been spilt on the
general question, but it cannot be said there is any definitive
statement, not even a good statement, which at least incorporates
all alternative viewpoints in a consistent way. You'll get some
idea of the field from the book I've written with Mordecai Kurz,
Public Investment, The Rate of Return, and Optimal Fiscal Policy.
You'll not want to read anything like the entire book, which is
basically theoretical. A lot of the issues will be found set forth
compactly in the Summary at the beginning of the book. You might
also find it worthwhile reading chapter 1, at least as far as page
14. You might also want to look at S. A. Marglin, "The Social Rate
of Discount and the Optimal Rate of Investment,” Quarterly Journal
of Economics 77 (1963): 95-111, and his book, Public Investment
Criteria (MIT Press, 1967), pages 47-692 A. K. Sen, "On Optimizing
the Rate of Saving," Economic Journal 71 (1961): 479-496; R. C.
Lind, "The Social Rate of Discount and the Optimal Rate of Investment:
Further Comment," Quarterly Journal of Economics 78 (1964): 336-345;
and possibly, J. E. Meade, a book entitled The Growing Economy
(Aldine, 1968), chpaters 12 and 13, particularly the latter.

 

 

(Unfortunately, Meade's exposition is extremely complex, but in
many respects he treats very important matters.)

I don't know quite that you mean by empirical evidence about
_ economic behavior. pul of course, the amounts saved each year,
whl this.could be taken as an expression of time preference in some in-
direct Way, We believe, on the whole, that savings is relatively
insensitive to the current rate of interest, which may prove some-
thing; but the matter is not yet definitely settled by any means.
Prof. J. Lederberg -2- March 8, 1971

Incidentally, I think it would be a very good idea for you to talk
to Bob Lind, in the Department of Engineering-Economics Systems.
He's very thoughtful and knows a great deal about matters of this
kind.

Perhaps when we are out this summer, we can have some further
discussions.

On another matter, the Kennedy School of Government here has a
seminar in analytic methods of public policy in which Thomas Schelling
and Richard Zeckhauser are perhaps the chief participants. They
would very much like to invite you to talk to them at some convenient
time during the coming academic year, 1971-2, particularly with
regard toward your risk-benefit interests in genetic and other fields.
If you find this intriguing, please let me know, and Dick Zeckhauser
will get in touch with you.

Sincerely,

tr. .
‘ kenneth J.

 
  

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