Valuing the Future: the social discount rate in cost-benefit analysis

Visiting researcher paper

This paper by Mark Harrison was released on 22 April 2010.

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Valuing the Future: the social discount rate in cost-benefit analysis (PDF - 710 Kb)

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Preliminaries (PDF - 132 Kb)
Cover, Copyright, Contents and Preface
Overview - including key points (PDF - 73 Kb)
Chapter 1 The concept of discounting in cost-benefit analysis (PDF - 72 Kb)
1.1 Introduction
1.2 The discount rate in cost-benefit analysis
1.3 Why discount?
1.4 Real and nominal discount rates
1.5 The discount rate’s impact on project viability
Chapter 2 Approaches to discounting (PDF - 114 Kb)
2.1 Different views on the social discount rate in practice
2.2 Cost-benefit analysis and the efficiency criterion
2.3 Defining the social discount rate
2.4 The prescriptive approach
2.5 Inter-generational issues
2.6 Why the efficiency standard is relevant for inter-generational project evaluation
Chapter 3 The discount rate and market benchmarks (PDF - 164 Kb)
3.1 The discount rate in an undistorted capital market
3.2 The effects of capital taxes
3.3 The Ramsey formula
3.4 The marginal return to capital
3.5 Risk
3.6 Discounting the distant future
Chapter 4 Setting the social discount rate (PDF - 88 Kb)
4.1 Adjusting for taxation and foreign capital flows
4.2 Adjusting for risk
Appendix A Accounting for Inflation (PDF - 104 Kb)
Appendix B How project finance affects present and future consumption (PDF - 108 Kb)
Appendix C Inter-generational comparisons: the social welfare function approach (PDF - 116 Kb)
Appendix D The shadow price of capital and the weighted average discount rate (PDF - 111 Kb)
Appendix E Foreign Capital (PDF - 85 Kb)
Appendix F Deriving the Ramsey equation (PDF - 76 Kb)
Appendix G Rates of return in Australia (PDF - 145 Kb)
Appendix H Asset pricing (PDF - 128 Kb)
Appendix I Discounting the distant future (PDF - 98 Kb)
References (PDF - 110 Kb)

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