Corpus ID: 13985725

Valuing the future: recent advances in social discounting

  title={Valuing the future: recent advances in social discounting},
  author={David William Pearce and Ben Groom and Cameron Hepburn and Phoebe Koundouri},
  journal={The World Economy},
The perplexing issue of discounting Prescriptive economics requires that, unless there are very good reasons to the contrary, economic policy should be based on the principle that individuals’ preferences should count. Indeed, the entire body of ‘ welfare economics’ centres round the formal identity of the statement “ X prefers A to B” and the statement “ X has higher welfare in A rather than B” . This combination of a seemingly innocuous and democratic value judgement— preferences should count… Expand

Figures and Tables from this paper

Ethics of the Discount Rate in the Stern Review on the Economics of Climate Change
Any comparison of the costs and benefits of climate change is dominated by the chosen discount rate. But, although the Stern Review emphasises the ethical nature of the parameters entering into itsExpand
Harnessing the uncertainty monster: Putting quantitative constraints on the intergenerational social discount rate
There is broad consensus among economists that unmitigated climate change will ultimately have adverse global economic consequences, that the costs of inaction will likely outweigh the cost of takingExpand
The Timing of Benefits of Climate Policies. Reconsidering the Opportunity Cost Argument
We examine the Opportunity Cost Argument (OCA) for discounting in detail. We distinguish several understandings of discounting and claim that discounting is supported by the OCA in the sense that theExpand
Zero discounting can compensate future generations for climate damage
In cost–benefit analysis of climate policy there are two main approaches to discounting, each with implications conflicting with our moral intuitions. Thus, discounted utilitarianism implies that weExpand
Éléments sur l'actualisation et l'environnement
The choice of a discount rate is central in project evaluation, all the more since the project's horizon is distant. The controversy about the appropriate discount rate has been given a new lifeExpand
Individual and social discounting in a viscous population
  • P. Sozou
  • Economics, Medicine
  • Proceedings of the Royal Society B: Biological Sciences
  • 2009
This study presents an evolutionary biological framework for social discounting for patch-structured iteroparous population with limited dispersal and shows that the social discount rate is generally lower than the individual (private) discount rate. Expand
Delay Discounting an D s ocial Policy i ssues
The present study used a delay discounting framework to study decisions about six social policy issues and one monetary outcome. For outcomes that nearly all participants discounted, social policiesExpand
Intergenerational Justice: How Reasonable Man Discounts Climate Damage
Moral philosophers and economists have evaluated the intergenerational problem of climate change by applying the whole gamut of theories on distributive justice. In this article, however, it isExpand
Reviewing Social Discounting within Intergenerational Moral Intuition
This article introduces some of the main arguments of discounting, namely time preference, growth, uncertainty and ethics. We develop the concept of intergenerational moral intuition with the aid ofExpand
A Social Discount Rate for Climate Damage to Future Generations Based on Regulatory Law
This article examines the implications for the social discount rate for damage due to climate change if risk to future generations is handled in accordance with the laws regulating our handling ofExpand


A social discount rate for the United Kingdom
Discussions about the appropriate discount rate to adopt for public decisions continue unabated. In the United Kingdom, Her Majesty's Treasury has conducted periodic reviews of the theoretical andExpand
On the 'Environmental' Discount Rate
Abstract In this paper I show that "environmentalism" itself can provide a rigorous foundation for the low and declining discount rates that environmentalists seem to favor in long-term cost-benefitExpand
The economics of risk and time
This book updates and advances the theory of expected utility as applied to risk analysis and financial decision making. Von Neumann and Morgenstern pioneered the use of expected utility theory inExpand
Discounting an uncertain future
We discuss the selection of the socially optimal discount rate for public investment projects that entail costs and benefits in the very long run. More specifically, we examine in an expected utilityExpand
Hyperbolic Discounting And Resource Collapse
This paper shows that the use of hyperbolic discounting in environmental regulation can have unfortunate consequences. In a three-period model we demonstrate that a planner who `naively` employsExpand
Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?
Costs and benefits in the distant future, such as those associated with global warming, long-lived infrastructure, hazardous and radioactive waste, and biodiversity often have little value today whenExpand
Time Horizon and the Discount Rate
We discuss the selection of the socially efficient discount rate for public investment projects that entail costs and benefits in the far distant future. We show that the discount rate should be aExpand
Time Horizon and the Discount Rate
  • C. Gollier
  • Economics, Mathematics
  • J. Econ. Theory
  • 2002
The benchmark result is that, in the absence of any risk of recession, the yield curve is decreasing if relative risk aversion is decreasing. Expand
Valuing the future : economic theory and sustainability
I develop a framework for thinking about some aspects of sustainability. The framework is one for modeling the dynamic interactions of economic and biological systems, studying the time paths thatExpand
Discounting environmental health risks: New evidence and policy implications
Abstract When environmental policy benefits accrue over a long time horizon, the valuation problem becomes more complex. Some analysts support the use of financial market interest rates forExpand