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Declining discount rates

Cropper, Maureen L., Freeman, Mark C., Groom, Ben ORCID: 0000-0003-0729-143X and Pizer, William A. (2014) Declining discount rates. American Economic Review, 104 (5). pp. 538-543. ISSN 0002-8282

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Identification Number: 10.1257/aer.104.5.538


We ask whether the US government should replace its current discounting practices with a declining discount rate schedule, as the United Kingdom and France have done, or continue to discount the future at a constant exponential rate. We present the theoretical basis for a declining discount rate (DDR) schedule, but focus on how, in practice, a DDR could be estimated for use by policy analysts. We discuss the empirical approaches in the literature and review how the United Kingdom and France estimated their DDR schedules. We conclude with advice on how the United States might proceed to consider modifying its current discounting practices.

Item Type: Article
Official URL:
Additional Information: © 2014 American Economic Association
Divisions: Geography & Environment
Subjects: E History America > E11 America (General)
F History United States, Canada, Latin America > F001 United States local history
H Social Sciences > H Social Sciences (General)
JEL classification: D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency; Cost-Benefit Analysis
H - Public Economics > H4 - Publicly Provided Goods > H43 - Project Evaluation; Social Discount Rate
Date Deposited: 12 Jun 2014 16:30
Last Modified: 16 May 2024 01:51

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