Is there Hyperinflation in the Afterlife?

Bauman (AEA, 2013) argues that since anyone in the present life can burn ‘joss paper,’ each person is incentivized to create as much afterlife fiat money as possible, since the marginal cost of producing joss paper is now zero due to the new app, creating a tragedy of the commons situation that leads to an inflation rate much higher than the social optimum.

However, I’d like to challenge Bauman on a few points. He assumes that all dead people go to the afterlife, ignoring the possibility of reincarnation. If some portion of people were reincarnated, that would increase the population growth rate in the afterlife above his .05% estimate. This would allow for much more Gross Deathly Product growth per de-capita than he assumes (reducing the likelihood of hyperinflation). He also assumes there is one afterlife location – if the afterlife is bifurcated between heaven and hell, we’d have to take class dynamics into effect, where there would be almost two separate autarkic economies. We might have differing money growth (and population growth) rates in each, potentially eliminating hyperinflation in one. If most joss paper were to flow to heaven (if the relatives on earth are more benevolent to their ‘good’ relatives), and populations increase at similar rates, we might actually see deflation in hell. Another point of contention is that while he assumes rational agents, he implicitly assumes perfect information. However, there is no perfect information transfer between the afterlife and the living world, so agents can be rational, conditioned on the present information set, but still do irrational things because of imperfect information. I apply this to the rationality of burning joss paper. People burn it because based on current information, they think it will provide resources to relatives in the afterlife, but we don’t know the passthrough rate – if it all being expropriated by the gatekeepers of the afterlife. We don’t know if the money is going directly to the people or if it must pass through a particular agency that sterilizes inflows and distributes them at their will (which would affect hyperinflation, and have implications on distribution and rationality in the present life). The final ‘nail in the coffin’ is that he assumes a capitalist economy with a resource distribution similar to that on earth. However, he rules out the very real possibility that there is no scarcity in the afterlife. With no scarcity, there really wouldn’t be prices regardless of the money supply increase, which rules out hyperinflation.