Future generations: the modified discounting method

Discounting while treating generations equally

This chapter asks whether equal treatment of generations is compatible with social discounting. It presents the rank-discounted utilitarian criterion, proposed by Stéphane Zuber and analyzed in Zuber and Asheim (2010), which combines equal treatment with social discounting by giving priority for the worse off not only due to their absolute level of well-being but also their relative rank in wel...

Discounting and the Environment Should Current Impacts be Weighted Differently than Impacts Harming Future Generations?

Background. In Life-Cycle Assessment (LCA), decision makers are often faced with tradeoffs between current and future impacts. One typical example is waste incineration, where immediate emissions to the air from the incineration process have to be weighted against future emissions of slag landfills. Long-term impacts are either completely taken into account or they are entirely disregarded in c...

Discounting of Long Term Costs: What Would Future Generations Prefer Us to Do?

Decisions with intergenerational consequences may leave future generations worse off (i.e., not be Pareto optimal) if costs and benefits are not discounted correctly. We point out that this happens if the conventional social discount rate is applied to intergenerational costs: with this rate the justification of intergenerational costs (benefits of a project are invested and the proceeds can co...

Perspectives on Discounting the Future

Discounting an uncertain future

The objective of this paper is to determine the socially optimal discount rate for public investment projects that entail costs and benefits in the very long run. We suppose that there is an exogenous process for the growth of consumption per capita, which is stochastic. We first evaluate the determinants of the discount rate for a specific horizon when the representative agent has a recursive ...