The social rate of discount is a crucial driver of the social cost of carbon (SCC), i.e. the expected present discounted value of marginal damages resulting from emitting one ton of carbon today. Policy makers should set carbon prices to the SCC using a carbon tax or a competitive permits...

The paper derives the optimal carbon tax in closed-form from an integrated assessment of climate change. The formula shows how carbon, temperature, and economic dynamics quantify the optimal mitigation effort. The model’s descriptive power is comparable to numeric models used in policy...

This paper explains the conceptual basis for the social rate of time preference (STP) and why it is the appropriate method of choosing the social discount rate (SDR), compared to the most prominent alternative method: the social opportunity cost of capital (SOC). We recommend that for...

Public sector projects in Iran are inefficiently carried out for reasons of mismanagement and poor prioritization. This problem may arise from the lack of a generally accepted social discount rate for project appraisal. The value of the social discount rate can have implications for resource...

Analysis of an original nationwide Internet survey reveals that health-related behavior shows associations with three aspects of time discounting: (i) impatience, measured by the overall discount rate; (ii) present bias, measured by the degree of declining impatience in the generalized hyperbolic...

This paper presents an infinite-horizon version of intergenerational utilitarianism. By studying discounted utilitarianism as the discount factor tends to one, we obtain a new welfare criterion: limit-discounted utilitarianism (LDU). We show that LDU meets the standard assumptions of efficiency,...

Many discounting choices affect both the decision maker as well as others. The interpersonal nature of these choices is not well explored because the current empirical literature primarily focuses on estimating individual discount rates (IDRs). We design a laboratory experiment to elicit...

Several discounted utility anomalies are explained as rational choices of an agent with standard preferences and stochastic income. We define the term structure of absolute risk aversion and demonstrate that the gain-loss asymmetry is observed for small gains and losses and a general utility...

In this paper, we establish an axiomatically founded generalized recursive smooth ambiguity model that allows for a separation among intertemporal substitution, risk aversion, and ambiguity aversion. We axiomatize this model using two approaches: the second-order act approach à la Klibanoff,...