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Discounting, Risk and Inequality: A General Approach

  • Marc Fleurbaey

    ()

    (Woodrow Wilson School and Center for Human Values - Princeton University [Pinceton])

  • Stéphane Zuber

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

The common practice consists in using a unique value of the discount rate for all public investments. Endorsing a social welfare approach to discounting, we show how different public investments should be discounted depending on: the risk on the return of the investment, the systematic risk on aggregate consumption, the distribution of gains and losses, and inequality. We also study the limit value of the discount rate for very long term investments, and the type of information that is needed about long-term scenarios in order to evaluate investments.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00973471.

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Date of creation: Mar 2014
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Publication status: Published in Documents de travail du Centre d'Economie de la Sorbonne 2014.15 - ISSN : 1955-611X. 2014
Handle: RePEc:hal:cesptp:halshs-00973471
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00973471
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