Characterizing the amount and speed of discounting procedures

Dean T. Jamison and Julian Jamison

No 10-14, Working Papers from Federal Reserve Bank of Boston

Abstract: This paper introduces the concept of categorizing the amount and speed of a discounting procedure in order to generate well-characterized families of procedures for use in social project evaluation. Exponential discounting isolates the concepts of amount and speed into a single parameter that must be disaggregated in order to characterize nonconstant rate procedures. The inverse of the present value of a unit stream of benefits provides a natural measure of the amount a procedure discounts the future. We propose geometrical- and time horizon-based measures of how rapidly a procedure acquires its ultimate present value, and we prove these values are the same.

Keywords: Production (Economic theory); Discount (search for similar items in EconPapers)
Date: 2010
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