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Activity Number: 354
Type: Contributed
Date/Time: Tuesday, August 2, 2016 : 10:30 AM to 12:20 PM
Sponsor: Business and Economic Statistics Section
Abstract #320513
Title: Retrospective Social Discount Rates
Author(s): James P. Howard, II*
Companies: University of Maryland University College
Keywords: project evaluation ; benefit-cost analysis ; public economics ; discount rates ; historical data

Benefit-cost analysis assumes that a future dollar is worth something less than a dollar today. The difference between the future value and the current value is called the discount rate. Economists, statisticians, and politicians routinely disagree over how to select the rate. Further, when performing a retrospective benefit-cost analysis, there is no clear method to apply social discounting in reverse. In this presentation, we will first develop the case for discounting retrospectively. Second, we will discuss potential rate selection regimes and develop a method based on historical borrowing. Third, we will give proposed values for the social discount rate for each year from 1961 through 2015. Finally, we will discuss the implications using this method and social discount rate on historical analyses.

Authors who are presenting talks have a * after their name.

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