Abstract: 

When individuals have heterogeneous and persistent degrees of one sided parental altruism, inequality may grow large and standard social welfare criteria are problematic. If the planner selects Pareto optimal allocations based on some target level of consumption inequality, the solution implies an aggregation of individuals'utilities that is strongly asymmetric and biased towards the less altruistic dynasties. If, instead, the planner selects Paretooptimal allocations based on a symmetric utilitarian criterion, the solution islikely to generate a large degree of long-run inequality (even relative to laissez-faire competitive equilibria), it can only be decentralized with negative estate taxes or lower bounds on bequests, and it is time inconsistent. I discuss these issues within a simple deterministic overlapping generations economy where parental altruism is defined bydynastic-specific discount rates of the next generations' utility.