Skip to main content


  • Hilary Greaves (a1)

This article surveys the debate over the social discount rate. The focus is on the economics rather than the philosophy literature, but the survey emphasizes foundations in ethical theory rather than highly technical details. I begin by locating the standard approach to discounting within the overall landscape of ethical theory. The article then covers the Ramsey equation and its relationship to observed interest rates, arguments for and against a positive rate of pure time preference, the consumption elasticity of utility, and the effect of various sorts of uncertainty on the discount rate. Climate change is discussed as an application.

Hide All
Adler M. 2013. The Pigou-Dalton Principle and the Structure of Distributive Justice. Unpublished Working Paper.
Alesina A., Tella R. D. and MacCulloch R.. 2004. Inequality and happiness: are Europeans and Americans different? Journal of Public Economics 88 (9–10): 20092042. doi:
Al-Najjar N. I. and Weinstein J.. 2009. The ambiguity aversion literature: a critical assessment. Economics and Philosophy 25 (3): 249284.
Arrhenius G. n.d. Population ethics: The challenge of future generations. Unpublished manuscript.
Arrow K. and Hurwicz L. (eds). 1977. An optimality criterion for decision-making under ignorance. In Studies in Resource Allocation Processes, 482. Cambridge: Cambridge University Press.
Arrow K. J. 1999. Discounting, morality, and gaming. In Discounting and Intergenerational Equity, ed. Portney P. R. and Weyant J. P., 13–22. Washington, DC: RFF Press.
Arrow K. J., Cropper M. L., Gollier C., Groom B., Heal G. M., Newell R. G. et al. 2014. Should governments use a declining discount rate in project analysis? Review of Environmental Economics and Policy, reu008.
Asheim G. B. and Buchholz W.. 2003. The malleability of undiscounted utilitarianism as a criterion of intergenerational justice. Econometrica 70: 405422.
Atkinson A. B. 1970. On the measurement of inequality. Journal of Economic Theory 2 (3): 244263.
Atkinson A. B. and Brandolini A.. 2010. On analyzing the world distribution of income. World Bank Economic Review 24 (1): 137.
Barro R. J. 1999. Ramsey meets Laibson in the neoclassical growth model. Quarterly Journal of Economics 114 (4): 11251152. doi: 10.1162/003355399556232.
Beckerman W. and Hepburn C.. 2007. Ethics of the discount rate in the Stern review on the economics of climate change. World Economics 8 (1): 187210.
Beckstead N. 2013. On the overwhelming importance of shaping the far future. Department of Philosophy, Rutgers University. Unpublished doctoral dissertation.
Blackorby C. and Donaldson D.. 1980. A theoretical treatment of indices of absolute inequality. International Economic Review, 107136.
Broome J. 1992. Counting the Cost of Global Warming. Cambridge: White Horse Press.
Broome J. 2004. Weighing Lives. Oxford: Oxford University Press.
Broome J. 2008. The ethics of climate change. Scientific American 298: 96102.
Broome J. 2012. Climate Matters. New York, NY: W. W. Norton and Company.
Buchholz W. and Schumacher J.. 2008. Discounting the Long-distant Future: A Simple Explanation for the Weitzman-Gollier Puzzle. CESifo Working Paper 2357.
Buchholz W. and Schumacher J.. 2010. Discounting and welfare analysis over time: Choosing the η. European Journal of Political Economy 26 (3): 372385. Retrieved from (Special Issue on Ethics and Economics). doi:
Caney S. 2008. Human rights, climate change, and discounting. Environmental Politics 17 (4): 536555.
Carlsson F., Daruvala D. and Johansson-Stenman O.. 2005. Are people inequality-averse, or just risk-averse? Economica 72 (287): 375396.
Clark A. E., Frijters P. and Shields M. A.. 2008. Relative income, happiness, and utility: an explanation for the Easterlin paradox and other puzzles. Journal of Economic Literature, 46 (1): 95144. doi: 10.1257/jel.46.1.95.
Cline W. R. 1992. The Economics of Global Warming. Washington, DC: Institute for International Economics.
Cowell F. and K. Gardiner K. 1999. Welfare Weights. STICERD Research Paper 20.
Cowen T. 1992. Consequentialism implies a zero rate of intergenerational discount. In Justice Between Age Groups and Generations, ed. Laslett P. and Fishkin J. S., 162168. New Haven, CT: Yale University Press.
Cowen T. and Parfit D.. 1992. Against the social discount rate. In Justice Between Age Groups and Generations, ed. Laslett P. and Fishkin J. S., 144161. New Haven, CT: Yale University Press.
Creedy J. 2006. Evaluating Policy: Welfare Weights and Value Judgements. Research Paper 971, Department of Economics, University of Melbourne.
Dasgupta P. 2008. Discounting climate change. Journal of Risk and Uncertainty 37: 141169.
Deaton A. and Muellbauer J.. 1980. Economics and Consumer Behavior. Cambridge: Cambridge University Press.
Diamond P. A. 1965. The evaluation of infinite utility streams. Econometrica 33 (1): 170177.
Dietz S., Hepburn C. and Stern N.. 2008. Economics, ethics and climate change. In Arguments for a Better World: Essays in Honour of Amartya Sen. Volume II: Society, Institutions and Development, ed. Basu K. and Kanbur R., 365386. Oxford: Oxford University Press.
Dietz S., Hope C. and Patmore N.. 2007. Some economics of dangerous climate change: reactions on the Stern Review. Global Environmental Change 17 (3): 311325.
Di Tella R. and MacCulloch R.. 2006. Some uses of happiness data in economics. Journal of Economic Perspectives 20 (1): 2546. doi: 10.1257/089533006776526111.
Dobson A. 1996. Representative democracy and the environment. In Democracy and the Environment, ed. Lafferty W. and Meadowcraft J., 124139. Cheltenham: Edward Elgar.
Dynan K. E. and Ravina E.. 2007. Increasing income inequality, external habits, and self-reported happiness. American Economic Review 97 (2): 226231. doi: 10.1257/aer.97.2.226.
Eeckhoudt L., Gollier C. and Schlesinger H.. 1995. The risk-averse (and prudent) newsboy. Management Science 41 (5): 786794.
Ellsberg D. 1961. Risk, ambiguity, and the Savage axioms. Quarterly Journal of Economics 75 (4): 643669.
Epstein L. G. 1986. Intergenerational preference orderings. Social Choice and Welfare 3: 151160.
Epstein L. G. 2010. A paradox for the smooth ambiguity model of preference. Econometrica 78 (6): 20852099.
Epstein L. G. and Zin S. E.. 1989. Substitution, risk aversion, and the temporal behavior of consumption and asset returns: a theoretical framework. Econometrica 57 (4): 937969.
Etner J., Jeleva M. and Tallon J.-M.. 2012. Decision theory under ambiguity. Journal of Economic Surveys 26 (2): 234270. doi: 10.1111/j.1467-6419.2010.00641.x.
Flanigan T. n.d. On discount rates in the cost-benefit analysis of climate change. Unpublished manuscript.
Fleurbaey M. 2012. Economics and economic justice. In Stanford Encyclopedia of Philosophy, Summer 2012 edition, ed. Zalta E. N.. URL:
Fleurbaey M. and Zuber S.. 2012. Climate policies deserve a negative discount rate. Chicago Journal of International Law 13: 565.
Fleurbaey M. and Zuber S.. 2015. Discounting, risk and inequality: a general approach. Journal of Public Economics 128: 3449.
Frederick S., Loewenstein G. and O'Donoghue T.. 2002. Time discounting and time preference. Journal of Economic Literature 40 (2): 351401.
Freeman M. C. 2010. Yes, we should discount the far-distant future at its lowest possible rate: a resolution of the Weitzman-Gollier puzzle. Economics: The Open-Access, Open-Assessment E-Journal 4 (2010–13).
Gardiner S. M. 2004. Ethics and global climate change. Ethics 114 (3): 555600.
Gierlinger J. and Gollier C.. 2008. Socially Efficient Discounting under Ambiguity Aversion. IDEI Working Paper 561.
Gilboa I. and D. Schmeidler D. 1989. Maxmin expected utility with non-unique prior. Journal of Mathematical Economics 18 (2): 141153.
Gollier C. 2004. Maximizing the expected net future value as an alternative strategy to gamma discounting. Finance Research Letters 1 (2): 8589.
Gollier C. 2006. An Evaluation of Stern's Report on the Economics of Climate Change. IDEI Working Paper 464.
Gollier C. 2010. Expected net present value, expected net future value, and the Ramsey rule. Journal of Environmental Economics and Management 59 (2): 142148.
Gollier C. 2012. The debate on discounting: reconciling positivists and ethicists. Chinese Journal of International Law 13: 549.
Gollier C. 2013. Pricing the Planet's Future: The Economics of Discounting in an Uncertain World. Princeton, NJ: Princeton University Press.
Gollier C. and Weitzman M. L.. 2010. How should the distant future be discounted when discount rates are uncertain? Economics Letters 107 (3): 350353.
Gollier C., Koundouri P. and Pantelidis T.. 2008. Declining discount rates: Economic justifications and implications for long-run policy. Economic Policy 23: 757795.
Goulder L. H. and Williams R. C.. 2012. The choice of discount rate for climate policy evaluation. Climate Change Economics 3 (4): 1250024.
Greaves H. 2017. Population axiology. Philosophy Compass (Forthcoming).
Groom B., Hepburn C., Koundouri P. and Pearce D.. 2005. Declining discount rates: the long and short of it. Environmental and Resource Economics 32: 445493.
Guesnerie R. 2004. Calcul économique et développement durable, 55 (3). Presses de Sciences Po (PFNSP).
Gustafsson J. E. and Torpman O. 2014. In defence of my favourite theory. Pacific Philosophical Quarterly 95 (2): 159174.
Hansen L. P. and Sargent T. J.. 2001. Robust control and model uncertainty. American Economic Review 91: 6066.
Hansen L. P. and Sargent T. J.. 2008. Robustness. Princeton, NJ: Princeton University Press.
Harman E. 2011. Does moral ignorance exculpate? Ratio 24 (4): 443468.
Harrod R. 1948. Towards a Dynamic Economics. London: Macmillan.
Harsanyi J. C. 1953. Cardinal utility in welfare economics and in the theory of risk-taking. Journal of Political Economy 61 (5): 434.
Harsanyi J. C. 1955. Cardinal welfare, individualistic ethics, and interpersonal comparisons of utility. Journal of Political Economy 63 (4): 309321.
Harsanyi J. C. 1977. Rational Behavior and Bargaining Equilibrium in Games and Social Situations. Cambridge: Cambridge University Press.
Heal G. and Millner A.. 2013. Uncertainty and Decision in Climate Change Economics. NBER Working Paper w18929.
Henderson N. and Bateman I.. 1995. Empirical and public choice evidence for hyperbolic social discount rates and the implications for intergenerational discounting. Environmental and Resource Economics 5 (4): 413423.
Hepburn C. and Groom B.. 2007. Gamma discounting and expected net future value. Journal of Environmental Economics and Management 53 (1): 99109.
IPCC. 1996. Climate Change 1995: Economic and Social Dimensions of Climate Change: Contribution of Working Group III to the Second Assessment Report of the Intergovernmental Panel on Climate Change, ed. Bruce J. P., Lee H. and Haites E. F.. Cambridge: Cambridge University Press.
Klibanoff P., Marinacci M. and Mukerji S. 2005. A smooth model of decision making under ambiguity. Econometrica 73 (6): 18491892.
Klibanoff P., Marinacci M. and Mukerji S. 2012. On the smooth ambiguity model: a reply. Econometrica 80 (3): 13031321.
Koopmans T. C. 1960. Stationary ordinal utility and impatience. Econometrica 28 (2): 287309.
Lebegue D. 2005. Revision du taux d'actualisation des investissements publics. Commissariat General au Plan.
Lockhart T. 2000. Moral Uncertainty and its Consequences. New York, NY: Oxford University Press.
Loewenstein G. and Prelec D.. 1992. Anomalies in intertemporal choice: evidence and an interpretation. Quarterly Journal of Economics 107 (2): 573597.
Lomborg B. 2001. The Skeptical Environmentalist: Measuring the Real State of the World. Cambridge: Cambridge University Press.
Lomborg B. 2004. Global Crises, Global Solutions. Cambridge: Cambridge University Press.
Marglin S. A. 1963. The social rate of discount and the optimal rate of investment. Quarterly Journal of Economics 77: 95111.
Mason E. 2015. Moral ignorance and blameworthiness. Philosophical Studies 172 (11): 30373057.
Morgan C., Burns T., Fitzpatrick R., Pinfold V. and Priebe S.. 2007. Social exclusion and mental health conceptual and methodological review. British Journal of Psychiatry 191 (6): 477483.
Newell R. G. and Pizer W. A.. 2003. Discounting the distant future: how much do uncertain rates increase valuations? Journal of Environmental Economics and Management 46 (1): 5271.
Nissan-Rozen I. 2015. Against moral hedging. Economics and Philosophy 31 (3): 349369.
Nordhaus W. D. 2007. A review of the 'Stern review on the economics of climate change'. Journal of Economic Literature 45 (4): 686702.
Nordhaus W. D. 2008. A Question of Balance. New Haven, CT: Yale University Press.
Oishi S., Kesebir S. and Diener E.. 2011. Income inequality and happiness. Psychological Science 22 (9): 10951100.
Okun A. M. 1975. Equality and Efficiency: The Big Trade-off. Washington, DC: Brookings Institution.
Payne S. 2000. Poverty, Social Exclusion and Mental Health: Findings from the 1999 PSE Survey. Working Paper 15, Townsend Centre for International Poverty Research.
Phelps E. S. and Pollak R. A.. 1968. On second-best national saving and game-equilibrium growth. Review of Economic Studies 35 (2): 185199.
Pigou A. C. 1932. The Economics of Welfare: Volume 1 (4th edn). London: Macmillan.
Pratt J. W. 1964. Risk aversion in the small and in the large. Econometrica 32: 122136.
Ramsey F. P. 1928. A mathematical theory of saving. Economic Journal 38: 543559. (Reprinted in F. P. Ramsey, Foundations: Essays in Philosophy, Logic, Mathematics, and Economics, ed. D. H. Mellor.)
Rose S. K. 2012. The role of the social cost of carbon in policy. Wiley Interdisciplinary Reviews: Climate Change 3 (2): 163195.
Ross J. 2006. Rejecting ethical deationism. Ethics 116 (4): 742768. doi: 10.1086/505234.
Rubinstein A. 2003. Economics and psychology? The case of hyperbolic discounting. International Economic Review 44 (4): 12071216.
Scheffler S. 1982. The Rejection of Consequentialism. Oxford: Clarendon Press (Revised edition 1994).
Schmeidler D. 1989. Subjective probability and expected utility without additivity. Econometrica 57 (3): 571587.
Selden L. 1978. A new representation of preferences over ‘certain x uncertain’ consumption pairs: the ‘ordinal certainty equivalent’ hypothesis. Econometrica 46 (5): 10451060.
Sen A. 1973. On Economic Inequality. Oxford: Oxford University Press.
Sepielli A. 2013. Moral uncertainty and the principle of equity among moral theories, 1. Philosophy and Phenomenological Research 86 (3): 580589.
Sepielli A. 2014. What to do when you don't know what to do when you don't know what to do . . . . Noûs 48 (3): 521544.
Sidgwick H. 1890. The Methods of Ethics. London: Macmillan.
Sinnott-Armstrong W. 2014. Consequentialism. In Stanford Encyclopedia of Philosophy, Spring 2014 edition, ed. Zalta E. N.. URL:
Slovic P. and Tversky A.. 1974. Who accepts Savage's axiom? Behavioral Science 19 (6): 368373.
Solow R. 1974. The economics of resources or the resources of economics. American Economic Review Papers and Proceedings 64: 114.
Stern N. 1977. Welfare weights and the elasticity of the marginal valuation of income. In AUTE Edinburgh Meeting of April 1976, ed. Artis M. and Nobay R.. Oxford: Basil Blackwell.
Stern N. 2007. The Economics of Climate Change: The Stern Review. Cambridge: Cambridge University Press.
Stern N. 2014. Ethics, equity and the economics of climate change. Paper 2: Economics and politics. Economics and Philosophy 30: 445501.
Sterner T. and Persson U. M.. 2008. An even sterner review: introducing relative prices into the discounting debate. Review of Environmental Economics and Policy 2 (1): 6176.
Strotz R. H. 1955. Myopia and inconsistency in dynamic utility maximization. Review of Economic Studies 23 (3): 165180.
Svensson L.-G. 1980. Equity among generations. Econometrica 48 (5): 12511256.
Temkin L. 1993. Inequality. Oxford: Oxford University Press.
Thaler R. 1981. Some empirical evidence on dynamic inconsistency. Economics Letters 8 (3): 201207.
Traeger C. P. 2012a. What's the Rate? Disentangling the Weitzman and the Gollier Effect. Working Paper Series. Berkeley, CA: Department of Agricultural & Resource Economics, UC Berkeley.
Traeger C. P. 2012b. Why Uncertainty Matters – Discounting under Intertemporal Risk Aversion and Ambiguity. CESifo Working Paper Series. Munich: CESifo Group.
Treasury H. M. 2003. The Green Book – Appraisal and Evaluation in Central Government. London: Stationery Office.
Wald A. 1945. Statistical decision functions which minimize the maximum risk. Annals of Mathematics 46: 265280.
Wald A. 1949. Statistical decision functions. Annals of Mathematical Statistics 20: 165205.
Weatherson B. 2014. Running risks morally. Philosophical Studies 167 (1): 141163.
Weitzman M. L. 1998. Why the far-distant future should be discounted at its lowest possible rate. Journal of Environmental Economics and Management 36: 201208.
Weitzman M. L. 2001. Gamma discounting. American Economic Review 91 (1): 260271.
Weitzman M. L. 2007. The Stern review on the economics of climate change. Journal of Economic Literature 45: 703724.
Weymark J. A. 1981. Generalized Gini inequality indices. Mathematical Social Sciences 1 (4): 409430.
Zuber S. and Asheim G. B.. 2012. Justifying social discounting: the rank discounted utilitarian approach. Journal of Economic Theory 147 (4): 15721601.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Economics & Philosophy
  • ISSN: 0266-2671
  • EISSN: 1474-0028
  • URL: /core/journals/economics-and-philosophy
Please enter your name
Please enter a valid email address
Who would you like to send this to? *



Full text views

Total number of HTML views: 2
Total number of PDF views: 66 *
Loading metrics...

Abstract views

Total abstract views: 351 *
Loading metrics...

* Views captured on Cambridge Core between 31st May 2017 - 14th December 2017. This data will be updated every 24 hours.