key term - Intergenerational Equity

Definition

Intergenerational equity is the concept that the current generation has an obligation to future generations to preserve and protect the natural and economic resources of the planet. It emphasizes the fair distribution of costs and benefits across different generations to ensure sustainable development and the well-being of future populations.

5 Must Know Facts For Your Next Test

1. Intergenerational equity is a key principle in sustainable development, ensuring that the needs of the present generation are met without compromising the ability of future generations to meet their own needs.
2. The concept of intergenerational equity is particularly relevant in the context of environmental protection, as the current generation's actions can have long-lasting impacts on the natural resources and climate that future generations will inherit.
3. Achieving intergenerational equity requires policymakers to consider the long-term consequences of their decisions and to balance the interests of different age groups within society.
4. Generational accounting is a tool used to assess the fairness of fiscal policies across generations, helping to ensure that the burden of government debt and taxation is distributed equitably.
5. The overlapping generations model in economics examines how the transfer of resources and obligations between different generations can impact economic outcomes and the well-being of future populations.

Review Questions

• Explain how the concept of intergenerational equity relates to the question of a balanced budget.
  • The concept of intergenerational equity is closely tied to the question of a balanced budget, as the current generation's fiscal policies can have significant implications for future generations. A balanced budget, or the lack thereof, can affect the distribution of resources and obligations between different age groups. For example, a government that runs persistent budget deficits may be passing on a larger debt burden to future generations, potentially compromising their ability to meet their own needs. Policymakers must consider the long-term consequences of their fiscal decisions and strive to achieve a fair balance between the interests of the current and future generations.
• Describe how the overlapping generations model can be used to analyze the impact of fiscal policies on intergenerational equity.
  • The overlapping generations model in economics provides a framework for analyzing the interactions between different generations within an economy and the transfer of resources and obligations between them. This model can be used to assess the impact of fiscal policies, such as government spending, taxation, and debt management, on the well-being of different age groups over time. By incorporating the dynamics of generational overlap, the model can help policymakers understand how their decisions today may affect the distribution of costs and benefits across generations, thereby informing their efforts to achieve greater intergenerational equity.
• Evaluate the role of generational accounting in promoting intergenerational equity in the context of a balanced budget.
  • Generational accounting is a valuable tool for promoting intergenerational equity in the context of a balanced budget. By examining the distribution of the government's lifetime net tax burden across different generations, generational accounting can help identify potential imbalances or unfair burdens placed on certain age groups. This information can then be used by policymakers to adjust fiscal policies, such as taxation, government spending, and debt management, to ensure a more equitable distribution of resources and obligations between the current and future generations. By incorporating generational accounting into their decision-making process, policymakers can work towards a balanced budget that not only addresses the immediate needs of the present generation but also safeguards the long-term well-being and development of future populations, thereby upholding the principles of intergenerational equity.

Related terms

Sustainability:

The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Generational Accounting: A method of fiscal policy analysis that examines the distribution of the government's lifetime net tax burden across different generations.

Overlapping Generations Model: An economic model that considers the interactions between different generations within an economy, focusing on the transfer of resources and obligations between them.