Discounting and restitution

Abstract

In some cases, restitution for past injustices involves awarding lump-sum payments to descendants of victims. This is made further complicated when the loss occurred generations ago and there is no genetic link between the descendants of the thieves and the victims. Intergenerational restitution should be based on a direct estimate of the moral value of such restitution, rather than following cost-benefit analysis. There is no clear answer provided by economic analysis for the appropriate rate of compounding across generations. Standard cost-benefit techniques based on time preference may not be suitable for comparing values across different lives, and the idea of a positive tribal rate of time preference is problematic as well. Using only the preferences of the living generation ignores the dead victims. Counterfactual analyses using rates of return on investment are complex and may not justify straightforward positive compounding. Ultimately, the rate of restitution is a moral judgment about how much money should be transferred today and how much weight should be given to present claims versus past injustices. – AI-generated abstract.