The Social Discount Rate

Andrew Caplin and John Leahy

No 7983, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In welfare theory it is standard to pick the consumption stream that maximizes the welfare of the representative agent. We argue against this position, and show that a benevolent social planner will generally place a greater weight on future consumption than does the representative agent. Our analysis has immediate implications for public policy: agents discount the future too much and the government should promote future oriented policies.

JEL-codes: D60 D90 (search for similar items in EconPapers)
Date: 2000-10
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Published as Andrew Caplin & John Leahy, 2004. "The Social Discount Rate," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1257-1268, December.

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Working Paper: The social discount rate (2001)
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