Paretian Intergenerational Discounting
45 Pages Posted: 24 Aug 2005
Date Written: August 2005
This paper argues that discounting costs and benefits of projects for the opportunity costs of capital Pareto dominates decision criteria that do not discount. It considers and rejects several objections to the Pareto dominance argument, including the problem of making compensating transfers for the costs and benefits of projects and whether taking opportunity costs into account is different than discounting. It also argues that discounting future costs and benefits of projects does not under-value future generations.
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