Universität zu Köln

Fochmann, Martin, Sachs, Florian, Sadrieh, Abdolkarim ORCID: 0000-0002-9322-4729 and Weimann, Joachim (2018). The two sides of public debt: Intergenerational altruism and burden shifting. PLoS One, 13 (8). SAN FRANCISCO: PUBLIC LIBRARY SCIENCE. ISSN 1932-6203

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Abstract

In controlled laboratory experiments with and without overlapping generations, we study the role of intergenerational altruism in public debt accumulation. Public debt is chosen by popular vote, pays for public goods, and is repaid with general taxes. We use an optimal control model to derive a theoretical benchmark. With a single generation, public debt is accumulated prudently. With multiple and over-lapping generations, the burden of debt and the risk of over-indebtedness are shifted to future generations. We find a weak but significant sign of intergenerational altruism, observing that the revealed debt preferences increase as the number of following generations decreases. However, we find considerably fewer intergenerational fairness concerns than one would expect on the basis of the behavioral and experimental literature. Instead, political debt cycles that vary with voters' age emerge. Debt ceiling mechanisms fail to encourage intergenerational altruism and do not mitigate the problem of burden shifting.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Fochmann, Martin UNSPECIFIED UNSPECIFIED UNSPECIFIED Sachs, Florian UNSPECIFIED UNSPECIFIED UNSPECIFIED Sadrieh, Abdolkarim UNSPECIFIED orcid.org/0000-0002-9322-4729 UNSPECIFIED Weimann, Joachim UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-175991
DOI:	10.1371/journal.pone.0202963
Journal or Publication Title:	PLoS One
Volume:	13
Number:	8
Date:	2018
Publisher:	PUBLIC LIBRARY SCIENCE
Place of Publication:	SAN FRANCISCO
ISSN:	1932-6203
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language GOVERNMENT DEBT; SOCIAL-SECURITY; DEFICITS; ECONOMY; POLICY; COMMONS Multiple languages Multidisciplinary Sciences Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/17599