Boston University School of Law

 

Valuing the Future: Intergenerational Discounting, Its Problems, and a Modest Proposal

Stephen Marks
Boston University School of Law


Boston University School of Law Working Paper 11-12

Abstract

This article examine how intergenerational investment projects, such as, investments related to global warming, natural resources, energy, etc., should be undertaken. In particular, it examines two popular prescriptions: 1) In making intergenerational investments, policymakers should use a zero discount rate. 2) In making intergenerational investments, policymakers should use the market rate. The article shows that neither of these prescriptions are correct. Indeed, the article suggests that using present-value discounting at all is extremely problematic. Instead, the best we can probably do is to is to adopt a simple algorithm: set certain minimal goals for future generations: clean air, potable water, sufficient energy supplies, a nontoxic environment, etc., and then analyze the most cost-effective way of achieving those goals.

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Suggested Citation:

Stephen Marks , "Valuing the Future: Intergeneraitonal Discounting, Its Problems, and a Modest Proposal"

Contact Information

Stephen Marks

Boston University School of Law
765 Commonwealth Avenue
Boston, MA 02215

smarks@bu.edu

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