Philosphers and Economists Can Agree on the Intergenerational Discount Rate and Climate Policy Paths

49 Pages Posted: 19 Sep 2022

See all articles by Frikk Nesje

Frikk Nesje

University of Copenhagen - Department of Economics

Moritz A. Drupp

University of Hamburg - Faculty of Business, Economics, and Social Sciences

Mark C. Freeman

University of York

Ben Groom

University of Exeter

Date Written: 2022

Abstract

The estimated values to society from long-term public projects, including climate change mitigation and infrastructure construction, are highly sensitive to the social discount rate (SDR) employed. Governmental guidance on social discounting has predominantly been based on input from expert economists. It is not clear, however, that economists possess any special expertise on the ethical issues that underpin long-term societal decision-making. This study compares expert economists’ views on key components of the long-term SDR with those of a disciplinary group of experts who may be deemed most trained on ethical matters: philosophers. The results indicate that both expert groups provide surprisingly similar recommendations on these components and on the SDR itself, with a real SDR recommendation of 2% receiving most support in both disciplines. An analysis of qualitative remarks shows areas of broad agreement and yet distinct differences in rationales. While economists provide numerous technical extensions within a consequentialist Discounted Utilitarian approach, philosophers advocate more strongly for alternative ethical approaches to standard Utilitarian calculus. In the politicized world of long-term decision-making, this paper illustrates how more inclusive and deliberative approaches to complex issues such as intergenerational justice can guide more nuanced decision-making today and lead to multidisciplinary support for climate action.

Keywords: intergenerational social discounting, expert survey, philosophy, economics, climate policy

JEL Classification: C830, D610, H430, Q580

Suggested Citation

Nesje, Frikk and Drupp, Moritz A. and Freeman, Mark and Groom, Ben, Philosphers and Economists Can Agree on the Intergenerational Discount Rate and Climate Policy Paths (2022). CESifo Working Paper No. 9930, Available at SSRN: https://ssrn.com/abstract=4219434 or http://dx.doi.org/10.2139/ssrn.4219434

Frikk Nesje (Contact Author)

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5, Bygn 26
Copenhagen, 1353
Denmark

Moritz A. Drupp

University of Hamburg - Faculty of Business, Economics, and Social Sciences ( email )

Von-Melle-Park 9
Hamburg, 20146
Germany

Mark Freeman

University of York ( email )

Heslington
University of York
York, YO10 5DD
United Kingdom

Ben Groom

University of Exeter ( email )

Northcote House
The Queen's Drive
Exeter, Devon EX4 4QJ
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
189
Abstract Views
706
Rank
297,560
PlumX Metrics