Intergenerational equity
Intergenerational equity in economic, psychological, and sociological contexts, is the idea of fairness or justice between generations. The concept can be applied to fairness in dynamics between children, youth, adults, and seniors. It can also be applied to fairness between generations currently living and future generations.[1]
Conversations about intergenerational equity may include basic human needs, economic needs, environmental needs and subjective human well-being.[2] It is often discussed in public economics, especially with regard to transition economics,[3] social policy, and government budget-making.[4] Many cite the growing U.S. national debt as an example of intergenerational inequity, as future generations will shoulder the consequences. Intergenerational equity is also explored in environmental concerns,[5] including sustainable development,[6] and climate change. The continued depletion of natural resources that has occurred in the past century will likely be a significant burden for future generations. Intergenerational equity is also discussed with regard to standards of living, specifically on inequities in the living standards experienced by people of different ages and generations.[7][8][9][10][11] Intergenerational equity issues also arise in the arenas of elderly care, social justice, and housing affordability.[12][13][14]
Public economics usage[edit]
History[edit]
Since the first recorded debt issuance in Sumaria in 1796 BC,[21] one of the penalties for failure to repay a loan has been debt bondage. In some instances, this repayment of financial debt with labor included the debtor's children, essentially condemning the debtor family to perpetual slavery. About one millennium after written debt contracts were created, the concept of debt forgiveness appears in the Old Testament, called Jubilee (Leviticus 25), and in Greek law when Solon introduces Seisachtheia. Both of these historical examples of debt forgiveness involved freeing children from slavery caused by their parents' debt.
The leaders of the Haudenosaunee Confederacy considered the precept of seven generation sustainability when making present decisions that could have significant impact on their potential future descendants.
Pope Francis, in his 2015 encyclical letter Laudato si', commented that
Standards of living usage[edit]
Discussions of intergenerational equity in standards of living reference differences between people of different ages or of different generations. Two perspectives on intergenerational equity in living standards have been distinguished by Rice, Temple, and McDonald.[9] The first perspective – a "cross-sectional" perspective – focuses how living standards at a particular point in time vary between people of different ages. The relevant issue is the degree to which, at a particular point in time, people of different ages enjoy equal living standards. The second perspective – a "cohort" perspective – focuses on how living standards over a lifetime vary between people of different generations. For intergenerational equity, the relevant issue becomes the degree to which people of different generations enjoy equal living standards over their lifetimes.[9]
Three indicators of intergenerational equity in standards of living have been proposed by d'Albis, Badji, El Mekkaoui, and Navaux.[8] Their first indicator originates from a cross-sectional perspective and describes the relative situation of an age group (retirees) with respect to the situation of another age group (younger people). Their second indicator originates from a cohort perspective and compares the living standards of successive generations at the same age. D'Albis, Badji, El Mekkaoui, and Navaux's third indicator is a combination of the two previous criteria and is both an inter-age indicator and an intergenerational indicator.[8] Further indicators of intergenerational equity have been developed by Rice, Temple, McDonald, and Wilson.[10][11]
In Australia, notable equality has been achieved in living standards, as measured by consumption, among people between the ages of 20 and 75 years.[9] Substantial inequalities exist, however, between different generations, with older generations experiencing lower living standards in real terms at particular ages than younger generations. One way to illustrate these inequalities is to look at how long different generations took to achieve a level of consumption of $30,000 per year (2009–10 Australian dollars). At one extreme, people born in 1935 achieved this level of consumption when they were roughly 50 years of age, on average. At the other extreme, Millennials born in 1995 had achieved this level of consumption by the time they were around 10 years of age.[9]
Considerations such as this have led some scholars to argue that standards of living have tended to increase generation over generation in most countries, as development and technology have progressed. When taking this into account, younger generations may have inherent privileges over older generations, which may offset the redistribution of wealth towards older generations.[43]