DOES A DISCOUNT RATE MEASURE THE COSTS OF CLIMATE CHANGE?

Christian Tarsney

Economics and Philosophy, 2017, vol. 33, issue 3, 337-365

Abstract: I argue that the use of a social discount rate to assess the consequences of climate policy is unhelpful and misleading. I consider two lines of justification for discounting: (i) ethical arguments for a ‘pure rate of time preference’ and (ii) economic arguments that take time as a proxy for economic growth and the diminishing marginal utility of consumption. In both cases I conclude that, given the long time horizons, distinctive uncertainties, and particular costs and benefits at stake in the climate context, discount rates are at best a poor proxy for the normative considerations they are meant to represent.

Date: 2017
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