An attack on the social discount rate
Parfit (Derek)
Source: Philosophy & Public Policy Quarterly, vol. 1, no. 1 (1980), pp. 8-11
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Editors’ Abstract

  1. Economists and policymakers are commonly faced with determining when it makes economic sense to invest in large-scale public projects whose investment costs are immediate, but whose benefits return only over a long period of time.
  2. In making these decisions, most economists make use of a positive discount rate that diminishes the value of costs and benefits as these occur further in the future – a project is worth undertaking if the discounted value of its benefits is greater than the discounted value of its costs. Reliance on such a discount rate provides one reason for believing that the present generation need not sacrifice on behalf of future generations.
  3. In the following abridgement of a portion of his Center working paper, "Energy Policy and the Further Future," Oxford University philosopher Derek Parfit argues that the social discount rate is unjustified.


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