Valuing the Far-off Future: Discounting and its Alternatives

Discounting has a central and controversial role in long-term policy evaluation: central because the result frequently turns upon the particular discount rate employed, and controversial because exponential discounting can generate recommendations that appear contrary to commonsense. This chapter reviews social discounting, addresses the arguments for and against a zero pure rate of time preference, outlines recent research suggesting that social discount rates should decline over time, and finally considers some alternatives to discounting in social decision-making.