Discounting disentangled

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JournalAmerican Economic Journal: Economic Policy
DateAccepted/In press - 4 Jan 2018
DateE-pub ahead of print - 1 Apr 2018
DatePublished (current) - 1 Nov 2018
Issue number4
Number of pages26
Pages (from-to)109-134
Early online date1/04/18
Original languageEnglish


The economic values of investing in long-term public projects are highly sensitive to the social discount rate (SDR). We surveyed over 200 experts to disentangle disagreement on the risk-free SDR into its component parts, including pure time preference, the wealth effect, and return to capital. We show that the majority of experts do not follow the simple Ramsey Rule, a widely used theoretical discounting framework, when recommending SDRs. Despite disagreement on discounting procedures and point values, we obtain a surprising degree of consensus among experts, with more than three-quarters finding the median risk-free SDR of 2 percent acceptable.

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