There is still much confusion about which discount rates should be used to evaluate actions having long-lasting impacts, as in the contexts of climate change, social security reforms or large public infrastructures for example. Contrary to the existing literature that focuses on the discount rate for safe projects, this paper characterizes the term structure of discount rates for investment pro...

This paper takes a step toward defining a continuous time methodology to analyze a class of time inconsistent capital accumulation games when the discount rate is non-constant and commitment is not possible. The subgame perfect and history independent equilibrium consumption policies are characterized with an equation that must be satisfied by the value function. The equation is reminiscent of ...

Making decisions about optimal investments in green infrastructure necessitates setting social discount rates. This paper suggests a practical way for determining the discount rate for projects or programmes in which one of the options is to maintain or improve land in its natural state. We propose an “equivalency principle” to derive a simple rule that sets the discount rate. The rule is based...

Discounted utilitarianism and the Ramsey equation prevail in the debate on the discount rate on consumption. The utility discount rate is assumed to be constant and to reflect either the uncertainty about the existence of future generations or a pure preference for the present. We question the unique status of discounted utilitarianism and discuss the implications of alternative criteria addres...

We examine the efficiency of conservation of a renewable resource whose natural productivity is influenced by random environmental disturbances. We allow for non-concave biological production and stock-dependent social welfare. Unlike deterministic models, conservation may be inefficient no matter how productive the resource growth function is. In addition, improvements in the natural productiv...

Arguments about the appropriate discount rate often start by assuming a Utilitarian social welfare function with isoelastic utility, in which the consumption discount rate is a function of the (constant) elasticity of marginal utility along with the (much discussed) utility discount rate. In this model, the elasticity of marginal utility simultaneously reflects preferences for intertemporal sub...

A human social discount function measures the value to a person of a reward to another person at a given social distance. Just as delay discounting is a hyperbolic function of delay, and probability discounting is a hyperbolic function of odds-against, social discounting is a hyperbolic function of social distance. Experiment 1 obtained individual social, delay, and probability discount functio...