JUNE 18, 2024
Mostly unknown outside academic circles, the social discount rate (SDR) is vital for understanding the value of infrastructure investments far into the future. But if that’s especially relevant in a world threatened by climate change, governments and economists have long argued exactly what discount rate to use, or if a fixed rate is even necessary. Economists Christian Gollier, Frederick van der Ploeg and Jiakun Zheng recently developed a major survey to gauge opinion on the SDR across their profession. Between the theoretical importance of project-specific discount rates, and a reluctance to tweak rates in practice, their findings are worth exploring – especially once you consider the need to expand the debate beyond economics.
