social discount rate

The Precipice: Existential Risk and the Future of Humanity

by Toby Ord  · 24 Mar 2020  · 513pp  · 152,381 words

monetary benefits, but here we are considering discounting wellbeing (or utility) itself. So the ηg term should be treated as zero, leaving us with a social discount rate equal to δ. I introduced δ by saying that it accounts for the catastrophe rate, but it is sometimes thought to include another component too

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third reason for discounting future benefits. But unlike the earlier reasons, there is substantial controversy over whether pure time preference should be included in the social discount rate. Philosophers are nearly unanimous in rejecting it.6 Their primary reason is that it is almost completely unmotivated. In a world where people have had

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have argued against pure time preference—see Sidgwick (1907), Parfit (1984) and Broome (2005)—I know of no philosophers who support its inclusion in the social discount rate, so it may be completely unanimous. For those who know philosophy, this is truly remarkable since philosophers disagree about almost every topic, including whether they

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term is inapplicable for the topic they are considering (such as for health benefits). 7 A recent survey of 180 economists who publish on the social discount rate found that their most common estimate for the pure rate of time preference was 0%, with a median of 0.5% (Drupp et al., 2018

Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals

by Tyler Cowen  · 15 Oct 2018  · 140pp  · 42,194 words

. Caplan, Bryan. 1999. “The Austrian Search for Realistic Foundations.” Southern Economic Journal 65, no. 4 (April): 823–838. Caplin, Andrew, and John Leahy. 2000. “The Social Discount Rate.” NBER Working Paper No. 7983. Castillo, Marco, Paul J. Ferraro, Jeffrey L. Jordan, and Petrie Ragan. 2011. “The Today and Tomorrow of Kids: Time Preferences

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. 2011. “Rule Consequentialism Makes Sense After All.” Social Philosophy and Policy 28, no. 2 (July): 212–231. Cowen, Tyler, and Derek Parfit. 1992. “Against the Social Discount Rate.” In Philosophy, Politics, and Society: Volume 6, edited by Peter Laslett and James Fishkin, 144–161. New Haven: Yale University Press. Cowley, Robert, Stephen E

The Skeptical Economist: Revealing the Ethics Inside Economics

by Jonathan Aldred  · 1 Jan 2009  · 339pp  · 105,938 words

services and natural capital.’ Nature 387: 253-260 Coulter, A. (2002) The Autonomous Patient. London, Nuffield Trust Cowan, T. and D. Parfit (1992) ‘Against the social discount rate’ in Philsophy, Politics and Society: Future Generations. P. Laslett and J. Fishkin (eds) New Haven, Yale University Press Cox, R. (2006) The Servant Problem. London

The Irrational Economist: Making Decisions in a Dangerous World

by Erwann Michel-Kerjan and Paul Slovic  · 5 Jan 2010  · 411pp  · 108,119 words

saving motive can tell us much about how cautiously people spend when their own future becomes uncertain. This well-documented observation justifies selecting a smaller social discount rate, implying more investments for the future. In The Economics of Risk and Time, which I wrote in 2002, I explain how the benefits of these

Wait: The Art and Science of Delay

by Frank Partnoy  · 15 Jan 2012  · 342pp  · 94,762 words

current benefits and costs. The rate that governments use to assess future benefits and costs is sometimes called the “social discount rate.” It can dramatically affect whether government decisions look good or bad. If the social discount rate is high, it means the decision-maker values the future less. Given the influence of the media and

The Measure of Progress: Counting What Really Matters

by Diane Coyle  · 15 Apr 2025  · 321pp  · 112,477 words

. On the consumption side, the comprehensive wealth framework has generally used the standard utility-­maximisation approach, over an infinite horizon with a (much-­debated) Ramsey social discount rate. However, it can also accommodate the capabilities perspective, with assets interpreted as a capabilities set. This does not lead to an immediate m ­ easure of

Rationality: What It Is, Why It Seems Scarce, Why It Matters

by Steven Pinker  · 14 Oct 2021  · 533pp  · 125,495 words

high a tax we should pay on carbon to mitigate climate change, depend on the rate at which we discount the future, sometimes called the social discounting rate.19 A rate of 0.1 percent, which reflects only the chance we’ll go extinct, means that we value future generations almost as much

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election cycles rather than the long term, and our sad experience of finding ourselves unprepared for foreseeable disasters like hurricanes and pandemics, suggest that our social discounting rate is irrationally high.21 We leave problems to future Homer, and don’t envy that guy. There’s a second way in which we irrationally

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, 47–50 the marshmallow dilemma, 47–48, 50 myopic future discounting, 52–53, 55 Odyssean self-control and, 53, 55–56 self-control and, 48 social discounting rate, 51–52 God argument for belief in (Pascal), 175 doesn’t play dice (Einstein), 111 morality and (Plato), 67 outside testable reality, 302 See also

Markets, State, and People: Economics for Public Policy

by Diane Coyle  · 14 Jan 2020  · 384pp  · 108,414 words

rate to be selected for government CBAs—especially for questions involving long horizons, such as environmental policies—is based on a 1928 formula for the social discount rate set out by Frank Ramsey and known as the Ramsey rule. It is rt = Δ + η * gt where δ is the pure social time preference

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growth rate of consumption per capita at time t (measuring how much additional consumption there will be in future time periods) The need for a social discount rate that differs from any private interest rates is due to several factors: observed market interest rates will not take an inter-generational perspective; future generations

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order to derive an estimate for one of the components, given the debate about each of them. In practice, different economists, and governments, use different social discount rates. The UK recommends a discount rate of 3.5% for calculating NPVs over less than 30 years based on the following calibration of the Ramsey

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Stern Review, The Economics of Climate Change, a landmark UK Treasury report.* It argued for a social discount rate of 1.4% (δ = 0.1%, g = 1.3%, and η = 1). A lower figure for the social discount rate makes the future net cost of environmental damage far greater, and likewise the net benefit of acting

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up to 4, reflecting a greater concern for income inequality (including over time), even with a low δ that gives a much higher social discount rate than Stern suggested. A social discount rate of 1.4% rather than 6% would multiply sixfold the discounted value of future climate damage in a hundred years from now.** The

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to be lower, people will behave less cautiously. Social capital: The institutions and relationships that broadly underpin economic transactions with trust and reduce free riding. Social discount rate: A rate that aims to put a present value from society’s perspective on future costs and benefits; particularly useful for cost-benefit analyses with

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smoking, 137, 152–53 social capital (trust), 137, 138, 147, 155–59, 168–69, 211 social cohesion, 7, 18 social comparison, 189, 190, 191, 195 social discount rate, 312–13, “socialist calculation” debate, 20 Social Insurance and Allied Services (Beveridge), 205 Social Limits to Growth (Hirsch), 161 social media, 51, 91–92, 93