Intergenerational Equity and the Discount Rate for Cost-Benefit Analsis

Joint with: Anna Rubinchik

Workshop is joint with Applied Microeconomic Theory. Current Office of Management and Budget (OMB) guidelines use the interest rate as a basis for the discount rate, and

have nothing to say about an intergenerationally fair discount rate. A traditional approach leads to too high values for the latter, and in a wide range. We propose to apply Relative Utilitarianism to derive the discount rate, and find it should equal the growth rate of real per-capita consumption, independent of the interest rate.

For more information, contact Steve Matthews.