Who Counts as Young? Matching Rules for Social Discounting

Abstract

In heterogeneous OLG economies, age alone does not tell us who counts as young or old in a local welfare comparison. For such a comparison to have normative content, it must specify the represented margin, the private unit of account, the current information that identifies the relevant cell, and the common support over which claims are made. This paper develops such a discipline, separating raw resource weights from residual weights expressed in private value units and showing that imposed local discount labels are valid precisely when they are induced by a potential on the supported comparison graph, whose vertices are current cells and whose edges are admissible age comparisons. A calibrated audit of an OLG model then maps the frontier of certified claims, with support, units, wedges, and anchors determining which welfare signs are justified.