A Note on Retrospective Social Discount Rates

14 Pages Posted: 31 Oct 2017

See all articles by James P. Howard, II

James P. Howard, II

Johns Hopkins Applied Physics Laboratory

Date Written: July 26, 2017

Abstract

In benefit-cost analysis, we accept that a future dollar is worth something less than a dollar today. However, we do not have a clear method to apply social discounting in retrospective benefit-cost analysis. In this note, we will first develop the case for using historical borrowing as the basis for a social discount rate (SDR) in retrospective benefit-cost analysis. Second, we will present a method for calculating the SDR using historical borrowing. Third, we will show an implementation of the method in the R programming language. Fourth, we will give proposed values for the SDR for the years from 1997 through 2016. Finally, we will discuss the implications of using this method and SDR on analyses.

Keywords: social discount rate, retrospective benefit-cost analysis

JEL Classification: H41, H43, O22, C01

Suggested Citation

Howard, James, A Note on Retrospective Social Discount Rates (July 26, 2017). Available at SSRN: https://ssrn.com/abstract=3061880 or http://dx.doi.org/10.2139/ssrn.3061880

James Howard (Contact Author)

Johns Hopkins Applied Physics Laboratory ( email )

11100 Johns Hopkins Road
Laurel, MD 20723
United States
2405920219 (Phone)
20723 (Fax)

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