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Inter-Generational Equity and the Rate of Discount in Long-Term Social Investment

In: Contemporary Economic Issues

Author

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  • Kenneth J. Arrow

    (Stanford University)

Abstract

The importance of the correct choice of discount rate for social (or indeed individual) investments hardly needs elaboration. In the social context, the discount rate is, at least in part, an expression of concerns about equity between the present and future generations and among future generations. I say, in part, because it also expresses both an expectation of the rates of return available to future generations in alternative uses of capital and an expectation of the growth of income of the representative individual.

Suggested Citation

  • Kenneth J. Arrow, 1999. "Inter-Generational Equity and the Rate of Discount in Long-Term Social Investment," International Economic Association Series, in: Murat R. Sertel (ed.), Contemporary Economic Issues, chapter 5, pages 89-102, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-14540-9_5
    DOI: 10.1007/978-1-349-14540-9_5
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    Cited by:

    1. Mohamed Mabrouk, 2005. "Intergenerational anonymity as an alternative to the discounted- sum criterion in the calculus of optimal growth II: Pareto optimality and some economic interpretations," GE, Growth, Math methods 0511007, University Library of Munich, Germany.
    2. Mohamed Mabrouk, 2005. "Intergenerational anonymity as an alternative to the discounted- sum criterion in the calculus of optimal growth I: Consensual optimality," GE, Growth, Math methods 0510013, University Library of Munich, Germany.
    3. Óscar Afonso & Mafalda Pinho, 2024. "Impact of inter-country corruption differences on wages and economic growth," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-46, April.
    4. Geoffrey Heal & Bengt Kriström, 2002. "Uncertainty and Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 3-39, June.
    5. Mark A. Moore & Anthony E. Boardman & Aidan R. Vining, 2020. "Social Discount Rates for Seventeen Latin American Countries: Theory and Parameter Estimation," Public Finance Review, , vol. 48(1), pages 43-71, January.
    6. Markus Knell, 2005. "On the Design of Sustainable and Fair PAYG Pension Systems When Cohort Sizes Change," Working Papers 95, Oesterreichische Nationalbank (Austrian Central Bank).
    7. Eun-Young Bae & Jihyung Hong & SeungJin Bae & Seokyung Hahn & Hyonggin An & Eun-joo Hwang & Seung-min Lee & Tae-jin Lee, 2022. "Korean Guidelines for Pharmacoeconomic Evaluations: Updates in the Third Version," Applied Health Economics and Health Policy, Springer, vol. 20(4), pages 467-477, July.
    8. Hugh Gravelle & Dave Smith, 2001. "Discounting for health effects in cost–benefit and cost‐effectiveness analysis," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 587-599, October.

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