Demographic changes and social discounting

Elisa Belfiori and Manuel Macera

Economics Letters, 2025, vol. 256, issue C

Abstract: This paper studies social discounting in the context of demographic transitions. We show how changes in population growth and age structure affect the social discount rate, giving rise to a demographic premium: the spread between the discount rate during a transition and that in a stationary environment. The premium is sizable and robust across a range of plausible assumptions about how consumption growth responds to demographic change. It is also larger for less developed and low-income countries, suggesting that long-term policy decisions requiring international cooperation are especially prone to tension and disagreement.

Keywords: Social discounting; Demographic changes; Population aging (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004215

DOI: 10.1016/j.econlet.2025.112584

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