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Issues in Applying Discount Rates

In: Forensic Economics

Author

Listed:
  • David D. Jones

    (Economic Consulting Services LLC)

Abstract

This chapter reviews the various approaches to discounting. Discounting takes into account the potential growth in value of future economic damages due to expected inflation or anticipated wage growth (the g factor) and the time value of money (the R factor) which reduces the present value. This may be done with separate, individual consideration of g and R, or with their having been combined into a net discount rate (NDR). There may be a single value for g and R (and NDR), or an array of values. The choice of values for those discounting factors may be based on an historic average of some length, or on projections of future value. There is no consensus among forensic economists which is the preferred approach.

Suggested Citation

  • David D. Jones, 2016. "Issues in Applying Discount Rates," Palgrave Macmillan Books, in: Frank D. Tinari (ed.), Forensic Economics, chapter 0, pages 135-144, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-56392-7_8
    DOI: 10.1057/978-1-137-56392-7_8
    as

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