Discounting disentangled

Research output: Contribution to journalJournal articlepeer-review

The economic values of investing in long-term public projects are highly sensitive to the social discount rate (SDR). We surveyed over 200 experts to disentangle disagreement on the risk-free SDR into its component parts, including pure time preference, the wealth effect and return to capital. We show that the majority of experts do not follow the simple Ramsey Rule, a widely-used theoretical discounting framework, when recommending SDRs. Despite disagreement on discounting procedures and point values, we obtain a surprising degree of consensus among experts, with more than three-quarters finding the median risk-free SDR of 2 percent acceptable.
Original languageEnglish
JournalAmerican Economic Journal: Economic Policy
Volume10
Issue number4
Pages (from-to)109
Number of pages134
ISSN1945-7731
DOIs
Publication statusPublished - 2018

ID: 248161730