Intergenerational Transfers and the Social Discount Rate
Author(s)
Howarth, Richard B.; Norgaard, Richard B.
Abstract
Cost-benefit analysis incorporates future costs and benefits into current economic calculations via the process of discounting. Thus the problem of evaluation of future outcomes appears to be reduced to the choice of the correct discount rate. This article shows that, even under the ideal conditions often assumed in economic theory, the choice of the optimal discount rate depends on nonmarket decisions about intergenerational bequests, or transfer of resources.
