Do People Care About Future Generations? Derived Preferences from Happiness Data

The main approaches for computing very long-term discount rates - revealed and stated preferences - have limitations. We overcome previous shortcomings using derived preferences, i.e. we retrieve information on very long-term time preferences from happiness data and people's expectations about the living conditions of future generations. We account for possible endogeneity between expectations about the future and current well-being using 2SLS. We find that negative (positive) expectations about future generations have a very large negative (positive) impact on subjective well-being. This finding suggests that the very long-term discount rate is lower than implied by most traditional economic analyses.