The Social Discount Rate

31 Pages Posted: 21 Oct 2000 Last revised: 2 Nov 2004

See all articles by Andrew Caplin

Andrew Caplin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

John V. Leahy

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2000

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.

Suggested Citation

Caplin, Andrew and Leahy, John V., The Social Discount Rate (October 2000). NBER Working Paper No. w7983, Available at SSRN: https://ssrn.com/abstract=246885

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John V. Leahy

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