Government discounting controversies: the valuation of social time preference
The conceptual basis and numerical quantification of the time discount rate (or rates) to use for the comparison of policies or projects from a national perspective have been extensively debated for over half a century. Many differences remain, some continuing over many decades and some emerging more recently. Over recent decades the concept of a social time preference rate, derived from estimates of pure time preference (d) and an elasticity of marginal utility (n), has become fairly well established in practical application, at least in Europe. There has however been much recent debate about the ethical basis of d and possibly?. It is suggested here that the arguments made for a zero or near zero value for d do not stand up well to close investigation, and that the case for any significant ethical element to n is weak. Also discussed are the valuation of marginal utility in developing countries and the application of government discounting to the very long term.
|Date of creation:||Nov 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Houghton Street, London WC2A 2AE|
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/grantham.
More information through EDIRC
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.:
- Richard Blundell & Martin Browning & Costas Meghir, 1993.
"Consumer demand and the life-cycle allocation of household expenditures,"
IFS Working Papers
W93/11, Institute for Fiscal Studies.
- Richard Blundell & Martin Browning & Costas Meghir, 1994. "Consumer Demand and the Life-Cycle Allocation of Household Expenditures," Review of Economic Studies, Oxford University Press, vol. 61(1), pages 57-80.
- Schelling, Thomas C, 1995. "Intergenerational discounting," Energy Policy, Elsevier, vol. 23(4-5), pages 395-401.
- Partha Dasgupta, 2011. "The Ethics of Intergenerational Distribution: Reply and Response to John E. Roemer," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 50(4), pages 475-493, December.
- Martin L. Weitzman, 1998.
Harvard Institute of Economic Research Working Papers
1843, Harvard - Institute of Economic Research.
- Dietz, Simon & Asheim, Geir B., 2012.
"Climate policy under sustainable discounted utilitarianism,"
Journal of Environmental Economics and Management,
Elsevier, vol. 63(3), pages 321-335.
- Simon Dietz & Geir B. Asheim, 2011. "Climate policy under sustainable discounted utilitarianism," GRI Working Papers 42, Grantham Research Institute on Climate Change and the Environment.
- Simon Dietz & Geir B. Asheim, 2011. "Climate Policy under Sustainable Discounted Utilitarianism," CESifo Working Paper Series 3563, CESifo Group Munich.
- Simon Dietz & Geir B. Asheim, 2011. "Climate policy under sustainable discounted utilitarianism," LSE Research Online Documents on Economics 37578, London School of Economics and Political Science, LSE Library.
- Newell, Richard G. & Pizer, William A., 2003.
"Discounting the distant future: how much do uncertain rates increase valuations?,"
Journal of Environmental Economics and Management,
Elsevier, vol. 46(1), pages 52-71, July.
- Pizer, William & Newell, Richard, 2000. "Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?," Discussion Papers dp-00-45, Resources For the Future.
- Cropper, Maureen L & Aydede, Sema K & Portney, Paul R, 1994. "Preferences for Life Saving Programs: How the Public Discounts Time and Age," Journal of Risk and Uncertainty, Springer, vol. 8(3), pages 243-65, May.
- Richard Layard & Guy Mayraz & Stephen J Nickell, 2007.
"The marginal utility of income,"
LSE Research Online Documents on Economics
19745, London School of Economics and Political Science, LSE Library.
- Richard Layard & Guy Mayraz & Stephen J. Nickell, 2007. "The Marginal Utility of Income," SOEPpapers on Multidisciplinary Panel Data Research 50, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Richard Layard & Guy Mayraz & Stephen Nickell, 2007. "The Marginal Utility of Income," CEP Discussion Papers dp0784, Centre for Economic Performance, LSE.
- Simon Dietz & Nicholas Stern, 2009. "On the Timing of Greenhouse Gas Emissions Reductions: A Final Rejoinder to the Symposium on "The Economics of Climate Change: The Stern Review and its Critics"," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 3(1), pages 138-140, Winter.
- Lind, Robert C, 1995. "Intergenerational equity, discounting, and the role of cost-benefit analysis in evaluating global climate policy," Energy Policy, Elsevier, vol. 23(4-5), pages 379-389.
- Bradford, David F, 1975. "Constraints on Government Investment Opportunities and the Choice of Discount Rate," American Economic Review, American Economic Association, vol. 65(5), pages 887-99, December.
- Atkinson, A. B., 1996. "Public Economics in Action: The Basic Income/Flat Tax Proposal," OUP Catalogue, Oxford University Press, number 9780198292166.
- Erhun Kula, 1984. "Derivation of Social Time Preference Rates for the United States and Canada," The Quarterly Journal of Economics, Oxford University Press, vol. 99(4), pages 873-882.
- Rabl, Ari, 1996. "Discounting of long-term costs: What would future generations prefer us to do?," Ecological Economics, Elsevier, vol. 17(3), pages 137-145, June.
- Ben Groom & Cameron Hepburn & Phoebe Koundouri & David Pearce, 2005. "Declining Discount Rates: The Long and the Short of it," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(4), pages 445-493, December.
- David Evans & Haluk Sezer, 2002. "A time preference measure of the social discount rate for the UK," Applied Economics, Taylor & Francis Journals, vol. 34(15), pages 1925-1934.
- E Kula, 1985. "An Empirical Investigation on the Social Time-Preference Rate for the United Kingdom," Environment and Planning A, , vol. 17(2), pages 199-212, February.
- Koichi Mera, 1969. "Experimental Determination of Relative Marginal Utilities," The Quarterly Journal of Economics, Oxford University Press, vol. 83(3), pages 464-477.
- Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975.
- David J. Evans & Haluk Sezer, 2005. "Social discount rates for member countries of the European Union," Journal of Economic Studies, Emerald Group Publishing, vol. 32(1), pages 47-59, January.
- Kathryn Smith, 2010. "Stern, climate policy and saving rates," Climate Policy, Taylor & Francis Journals, vol. 10(3), pages 289-297, May.
When requesting a correction, please mention this item's handle: RePEc:lsg:lsgwps:wp68. 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: (The GRI Administration)
If references are entirely missing, you can add them using this form.