Discounting earnings with stochastic discount rates

Discounting the distant future—Data on Australian discount rates estimated by a stochastic interest rate model

Data on certainty equivalent discount factors and discount rates for stochastic interest rates in Australia are provided in this paper. The data has been used for the analysis of investments into climate adaptation projects in ׳It׳s not now or never: Implications of investment timing and risk aversion on climate adaptation to extreme events׳ (Truong and Trück, 2016) [3] and can be used for othe...

Against High Discount Rates

In the economics of climate change, the future benefits of greenhouse gas emissions abatement are commonly discounted at a rate equal to the long-run return on corporate stocks, which averaged 6% per year during the 20 century. Since a 6% discount rate implies that one dollar of benefits obtained one century from the present attains a present value of less than one cent, this method implies tha...

Declining Discount Rates Maureen

In this paper we ask whether the US government should replace its current discounting practices with a declining discount rate schedule, as the UK and France have done, or should continue to discount the future at a constant exponential rate. To address the question, we briefly present the theoretical basis for a declining discount rate (DDR) schedule, but focus on how, in practice, a DDR could...

Determining Consumers’ Discount Rates With Field Studies

Determining Consumers’ Discount Rates With Field Studies Because utility/profits, state transitions and discount rates are confounded in dynamic models, discount rates are typically fixed to estimate the other two factors. Yet these rate choices, if misspecified, generate poor forecasts and policy prescriptions. Using a field study wherein cellphone users transitioned from a linear to three-par...

Discount Rates and Sustainability