TY  - JOUR
TI  - More appropriate discounting: the rate of social time preference and the value of the social discount rate
AU  - Moore, Mark A.
AU  - Boardman, Anthony E.
AU  - Vining, Aidan R.
PY  - 2013
PB  - Cambridge University Press (CUP)
LA  - eng
AB  - Recently, a number of authors, including Burgess and Zerbe, have recommended the use of a real social discount rate (SDR) in the range of 6–8% in benefit-cost analysis (BCA) of public projects. They derive this rate based on the social opportunity cost of capital (SOC) method. In contrast, this article argues that the correct method is to discount future impacts based on the rate of social time preference (STP). Flows in or out of private investment should be multiplied by the shadow price of capital (SPC). Using this method and employing recent United States data, we obtain an estimate of the rate of STP of 3.5% and an SPC of 2.2. We also re-estimate the SDR using the SOC method and conclude that, even if analysts continue to use this method, they should use a considerably lower rate of about 5%.
UR  - https://doi.org/10.1515/jbca-2012-0008
DO  - 10.1515/jbca-2012-0008
T2  - Journal of benefit-cost analysis: JBCA
VL  - 4
IS  - 1
SN  - 2152-2812
SP  - 1-16
UR  - https://www.pollux-fid.de/r/cr-10.1515/jbca-2012-0008
H1  - Pollux (Fachinformationsdienst Politikwissenschaft)
ER  -