scholarly journals DOES A DISCOUNT RATE MEASURE THE COSTS OF CLIMATE CHANGE?

2017 ◽  
Vol 33 (3) ◽  
pp. 337-365 ◽  
Author(s):  
Christian Tarsney
Keyword(s):  
Discount Rate ◽  
Time Preference ◽  
Marginal Utility ◽  
Costs And Benefits ◽  
Social Discount Rate ◽  
Time Horizons ◽  
Rate Measure ◽  
Long Time ◽  
Diminishing Marginal Utility ◽  
Normative Considerations

Abstract:I argue that the use of a social discount rate to assess the consequences of climate policy is unhelpful and misleading. I consider two lines of justification for discounting: (i) ethical arguments for a ‘pure rate of time preference’ and (ii) economic arguments that take time as a proxy for economic growth and the diminishing marginal utility of consumption. In both cases I conclude that, given the long time horizons, distinctive uncertainties, and particular costs and benefits at stake in the climate context, discount rates are at best a poor proxy for the normative considerations they are meant to represent.

scholarly journals Discounting Disentangled

2018 ◽  
Vol 10 (4) ◽  
pp. 109-134 ◽  
Author(s):  
Moritz A. Drupp ◽  
Mark C. Freeman ◽  
Ben Groom ◽  
Frikk Nesje
Keyword(s):  
Discount Rate ◽  
Time Preference ◽  
Wealth Effect ◽  
Social Discount Rate ◽  
Economic Values ◽  
Public Projects ◽  
Highly Sensitive ◽  
The Social ◽  
Ramsey Rule

The economic values of investing in long-term public projects are highly sensitive to the social discount rate (SDR). We surveyed over 200 experts to disentangle disagreement on the risk-free SDR into its component parts, including pure time preference, the wealth effect, and return to capital. We show that the majority of experts do not follow the simple Ramsey Rule, a widely used theoretical discounting framework, when recommending SDRs. Despite disagreement on discounting procedures and point values, we obtain a surprising degree of consensus among experts, with more than three-quarters finding the median risk-free SDR of 2 percent acceptable. (JEL C83, D61, D82, H43, Q58)

scholarly journals A time preference measure of the social discount rate for Iran

2018 ◽  
Vol 7 (1) ◽  
Author(s):  
Arian Daneshmand ◽  
Esfandiar Jahangard ◽  
Mahnoush Abdollah-Milani
Keyword(s):  
Discount Rate ◽  
Time Preference ◽  
Social Discount Rate ◽  
The Social ◽  
Preference Measure

scholarly journals DISCOUNTING FOR PUBLIC POLICY: A SURVEY

2017 ◽  
Vol 33 (3) ◽  
pp. 391-439 ◽  
Author(s):  
Hilary Greaves
Keyword(s):  
Climate Change ◽  
Public Policy ◽  
Interest Rates ◽  
Discount Rate ◽  
Ethical Theory ◽  
Time Preference ◽  
Social Discount Rate ◽  
The Social ◽  
Positive Rate ◽  
Technical Details

Abstract:This article surveys the debate over the social discount rate. The focus is on the economics rather than the philosophy literature, but the survey emphasizes foundations in ethical theory rather than highly technical details. I begin by locating the standard approach to discounting within the overall landscape of ethical theory. The article then covers the Ramsey equation and its relationship to observed interest rates, arguments for and against a positive rate of pure time preference, the consumption elasticity of utility, and the effect of various sorts of uncertainty on the discount rate. Climate change is discussed as an application.

scholarly journals Time preferences are reliable across time-horizons and verbal vs. experiential tasks

2018 ◽  
Author(s):  
Evgeniya Lukinova ◽  
Yuyue Wang ◽  
Steven F. Lehrer ◽  
Jeffrey C. Erlich
Keyword(s):  
Delay Discounting ◽  
Time Preference ◽  
Animal Studies ◽  
Time Preferences ◽  
Biological Mechanisms ◽  
Discount Factors ◽  
Time Horizons ◽  
Long Time ◽  
Experiential Tasks ◽  
Human Animal

AbstractIndividual differences in delay-discounting correlate with important real world outcomes, e.g. education, income, drug use, & criminality. As such, delay-discounting has been extensively studied by economists, psychologists and neuroscientists to reveal its behavioral and biological mechanisms in both human and non-human animal models. However, two major methodological differences hinder comparing results across species. Human studies present long time-horizon options verbally, whereas animal studies employ experiential cues and short delays. To bridge these divides, we developed a novel language-free experiential task inspired by animal decision-making studies. We find that subjects’ time-preferences are reliable across both verbal/experiential differences and also second/day differences. When we examined whether discount factors shifted or scaled across the tasks, we found a surprisingly strong effect of temporal context. Taken together, this indicates that subjects have a stable, but context-dependent, time-preference that can be reliably assessed using different methods; thereby, providing a foundation to bridge studies of time-preferences across species.

DISCOUNTING, RISK, AND UNCERTAINTY IN NATURAL RESOURCE DAMAGE ASSESSMENTS

2008 ◽  
Vol 2008 (1) ◽  
pp. 1157-1161
Author(s):  
Steve Hampton ◽  
Matthew Zafonte
Keyword(s):  
Time Preference ◽  
Risk And Uncertainty ◽  
Review Time ◽  
Restoration Project ◽  
Time Horizons ◽  
The Future ◽  
Scaling Methods ◽  
Long Time ◽  
Federal Guidelines ◽  
Over Time

ABSTRACT Restoration-based scaling methods, such as Habitat or Resource Equivalency Analysis (HEA or REA), quantify lost resource services from an injury and gained resource services from a restoration project into the future. In many cases, the injury and/or the restoration project are projected to last several decades or even into perpetuity. Following economic theory and federal guidelines, resources provided (or lost) in the future are discounted at some specified rate, usually 3%. This paper reviews the role and significance of discounting in restoration scaling. We review time preference, inter generational concerns, risk, and uncertainty as rationales for discounting, and examine various discounting formulations (e.g. constant and hyperbolic). We present several quantitative examples in a restoration-scaling context regarding different discounting approaches. We conclude that, while the specification of the discount rate can have a large effect on restoration scaling calculations with long time horizons, incorporation of risk and uncertainty of restoration project benefits over time can overwhelm the effect of alternative specifications of time preference.

Research on Social Profitability Threshold of China Intercity Railway Based on Passenger Demand

2014 ◽  
Vol 590 ◽  
pp. 901-905
Author(s):  
Tian Tian Gan ◽  
Ke Qi Wu ◽  
Ji Meng Tang
Keyword(s):  
Discount Rate ◽  
Costs And Benefits ◽  
Social Discount Rate ◽  
Minimum Level ◽  
Regional Economic ◽  
Passenger Demand ◽  
Economic Level ◽  
Similar Line ◽  
Intercity Railway ◽  
Transport Modes

The paper discussed the minimum level of passenger demand which could make intercity railway project social profitability in China. The analysis of the costs and benefits linked to other alternative transport modes has been taken into account. The results show that the intercity railway studied is socially profitable with a demand of 4.07 million passengers and a social discount rate of 7%, and the conclusion also applies to other intercity railways in China with similar line conditions and regional economic level.

Positive Social Time Preference

2021 ◽  
pp. 230-268
Author(s):  
Joseph Heath
Keyword(s):  
Discount Rate ◽  
Death Rate ◽  
Time Preference ◽  
Temporal Discounting ◽  
Social Discount Rate ◽  
Carbon Abatement ◽  
Social Time ◽  
Social Rate ◽  
The Social

Recent debates have made it clear that the choice of a social discount rate has enormous consequences for the amount of carbon abatement that will be recommended. The social discount rate determines how future costs are to be compared to present costs. Philosophers have been almost unanimous in endorsing the view that the only acceptable social rate of time preference is zero, a view that, taken literally, has either absurd or extremely radical implications. The first goal of this chapter is to show that the standard arguments against temporal preference are much less persuasive than they are usually taken to be. The second goal is to explore three different avenues of argument that could be adopted in order to show that temporal discounting of welfare may be permissible. The chapter concludes with a suggestion for how deontologists could accept a pure time preference derived from the current global death rate.

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