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The Cross‐Sectional Implications of the Social Discount Rate

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  • Maya Eden

Abstract

In this paper, I consider two normative questions: (1) how should policymakers approach tradeoffs that involve different age groups, and (2) at what rate should policymakers discount the consumption of future generations? I demonstrate that, under standard assumptions, these two questions are equivalent: caring more about the future means caring less about the elderly. Even small differences between the social discount rate and the market interest rate can have significant quantitative implications for the relative value placed on the consumption of different age groups.

Suggested Citation

  • Maya Eden, 2023. "The Cross‐Sectional Implications of the Social Discount Rate," Econometrica, Econometric Society, vol. 91(6), pages 2065-2088, November.
    • Handle: RePEc:wly:emetrp:v:91:y:2023:i:6:p:2065-2088
    DOI: 10.3982/ECTA20844
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    References listed on IDEAS

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    Cited by:

    1. Tatiana Kossova & Maria Sheluntcova, 2026. "The Choice of a Social Discount Rate for Transport Projects: The Case of Russia and Post-Soviet Countries," Evaluation Review, , vol. 50(3), pages 462-481, June.
    2. Jinchi Dong & Richard S. J. Tol & Fangzhi Wang, 2024. "Towards a representative social cost of carbon," Papers 2404.04989, arXiv.org.
    3. Belfiori, Elisa & Macera, Manuel, 2025. "Demographic changes and social discounting," Economics Letters, Elsevier, vol. 256(C).
    4. Frikk Nesje & Paolo G. Piacquadio & Paolo Giovanni Piacquadio, 2025. "Intergenerational Discounting and Inequality," CESifo Working Paper Series 11630, CESifo.
    5. Mary Ann Bronson & Daniel Haanwinckel & Maurizio Mazzocco, 2024. "Taxation and Household Decisions: an Intertemporal Analysis," NBER Working Papers 32861, National Bureau of Economic Research, Inc.

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