Should moral sentiments be incorporated into benefit-cost analysis? An example of long-term discounting
There are currently debates both about the ability to measure the value of moral sentiments and the nature of benefit-cost analysis. Moral sentiments can be reasonably measured in many situations and their consideration can improve benefit-cost analysis in any case. This argument is presented by briefly considering measurement issues and the example of discount rates for long-term projects in the context of a benefit-cost analysis. The suggestion has been made that it is immoral and unethical to undervalue future generations by discounting, and recently the federal government has recognized these moral concerns about discounting. Yet, the logic of wealth maximization requires discounting. This dilemma may be resolved by realizing that the problem is one of larger concern over missing values that arise from the general tendency of benefit-cost analyses to ignore ethical values. This deficiency is overcome by a modification to benefit-cost analysis (called KHM, for Kaldor-Hicks-Moral) that incorporates moral values directly into the benefit-cost analysis and, inter alia, recognizes all values for which there is a willingness to pay. Insofar as the current generation is willing to pay to avoid future moral harm, this is incorporated into the KHM approach. This article illustrates how KHM incorporates missing values and shows how compensation and mitigation can eliminate or reduce the concern over moral harm to future generations. Thus it is not necessary to use lower discount rates to recognize moral harm. Copyright Springer Science + Business Media, Inc. 2004
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 37 (2004)
Issue (Month): 3 (December)
|Contact details of provider:|| Web page: http://www.springer.com|
Web page: http://policysciences.org/index.html
|Order Information:||Web: http://www.springer.com/political+science/journal/11077/PS2|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
- Palfrey, Thomas R & Prisbrey, Jeffrey E, 1997.
"Anomalous Behavior in Public Goods Experiments: How Much and Why?,"
American Economic Review,
American Economic Association, vol. 87(5), pages 829-846, December.
- Thomas R. Palfrey & Jeffrey Prisbrey, 2010. "Anomalous Behavior in Public Goods Experiments: How Much and Why?," Levine's Working Paper Archive 1380, David K. Levine.
- Per-Olov Johansson, 1992. "Altruism in cost-benefit analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(6), pages 605-613, November.
When requesting a correction, please mention this item's handle: RePEc:kap:policy:v:37:y:2004:i:3:p:305-318. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.