Intergenerational Decision-Making

Discounting the future has been described as one of the most critical problems in all of economics, not least because small changes in the discount rate can substantially alter the recommended stringency of climate policy. The following questions will therefore be addressed in the project:

1. What is the extent of disagreement on the appropriate discount rate for long-term public policy-making between experts? How should the uncertainty (of forecasts) and disagreement (on value judgments) between experts be treated when aggregating responses into a single long-term discount rate?

2. Are the probable future negative effects of climate change an argument for decreasing the discount rate to promote the interests of future generations? Under which conditions can decreasing the discount rate be a means for achieving accumulation of consumption, potentially without increasing the climate threat.

3. What is the normatively desired discount rate when current decision-makers have coinciding concerns for the future? The answer may have implications for the modeling of regional integrated models of climate and the economy.

4. How should government agencies or companies set their discount rates when assessing long-lived projects?


Published June 8, 2017 1:37 PM - Last modified June 10, 2017 5:29 PM