Social Discount Rate: Assessment Methodology

The purpose of the paper is to investigate the assessment methods of social discount rate, to determine its calculation algorithm and to substantiate applied aspects relatively implementation of one or another method during cash flow discounting in social projects. Methodology. The research used such methods as follows: method of comparative analysis was used to find out advantages and limitations of chosen assessment methodologies of the social discount rate; synthesis and generalization methods were used during investigation of the gathered experience concerning application of assessment methodology of social discount rate; logical method was used to substantiate made assumptions; formalization method was used to determine assessment parameters of social discount rate. Results. To achieve the target goal, the following tasks were solved: theoretical studies on the assessment of social discount rate were systemized and the most adapted method for a practical implementation was determined; available pragmatic approaches to the determination of the parameters of social discount rate were investigated and the algorithm of its estimation is substantiated; evaluation of research results were tried out. Practical implications. The article substantiates the necessity of application of social discount rate in the evaluation process of investment projects of the public sector. The theoretical approaches to the choice of the social discount rate were studied. The assessment methods developed and adapted for application in the world practice for discounting public projects were considered. The arguments concerning the expediency of application of the social rate of time preferences for the evaluation of public projects are considered. Different approaches to the determination of the social rate of time preferences are analysed. Value/originality. As a result of the research, parameters of the social rate of time preferences were determined. The application algorithm of the assessment methodology of the social rate of time preferences for public project discounting is indicated. The approbation of the assessment methodology of the social discount rate for discounting projects of the public sector in Ukraine was carried out.