Discounting

Christian Gollier ()
Additional contact information
Christian Gollier: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

Post-Print from HAL

Abstract: This document is a newcomer guide to the economic theory of discounting, with applications to climate change and sustainability. It borrows ingredients from public economics, decision theory, and asset pricing theory, without any prerequisites beyond microeconomics 101. Aiming at sustainability issues, I focus the analysis on the valuation of intergenerational impacts. The starting point is the Ramsey rule, now more than a century old: We discount the future because we are inequality-averse and because we are used to believe that future generations will be wealthier than us. From this trivial but fundamental insight, I explore the role of uncertainty, a key ingredient for any realistic representation of the distant future of humanity on this planet.

Keywords: Discounting; Asset price; Carbon price; Sustainability; Climate change; Deep uncertainty; Ramsey rule (search for similar items in EconPapers)
Date: 2024-12-10
References: Add references at CitEc
Citations:

Published in Handbook of the Economics of Climate Change, 1 (1), Handbook of the Economics of Climate Change, pp.113-142, 2024, 9780443313240. ⟨10.1016/bs.hesecc.2024.10.007⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04942905

DOI: 10.1016/bs.hesecc.2024.10.007

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().