Inter-Generational Equity and the Rate of Discount in Long-Term Social Investment

Kenneth Arrow

Chapter 5 in Contemporary Economic Issues, 1999, pp 89-102 from Palgrave Macmillan

Abstract: Abstract The importance of the correct choice of discount rate for social (or indeed individual) investments hardly needs elaboration. In the social context, the discount rate is, at least in part, an expression of concerns about equity between the present and future generations and among future generations. I say, in part, because it also expresses both an expectation of the rates of return available to future generations in alternative uses of capital and an expectation of the growth of income of the representative individual.

Keywords: Interest Rate; Discount Rate; Future Generation; Marginal Utility; Time Preference (search for similar items in EconPapers)
Date: 1999
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DOI: 10.1007/978-1-349-14540-9_5

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