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The Cross‐Sectional Implications of the Social Discount Rate

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  • Maya Eden

Abstract

In this paper, I consider two normative questions: (1) how should policymakers approach tradeoffs that involve different age groups, and (2) at what rate should policymakers discount the consumption of future generations? I demonstrate that, under standard assumptions, these two questions are equivalent: caring more about the future means caring less about the elderly. Even small differences between the social discount rate and the market interest rate can have significant quantitative implications for the relative value placed on the consumption of different age groups.

Suggested Citation

  • Maya Eden, 2023. "The Cross‐Sectional Implications of the Social Discount Rate," Econometrica, Econometric Society, vol. 91(6), pages 2065-2088, November.
    • Handle: RePEc:wly:emetrp:v:91:y:2023:i:6:p:2065-2088
    DOI: 10.3982/ECTA20844
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    References listed on IDEAS

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    Cited by:

    1. Jinchi Dong & Richard S.J. Tol & Fanzhi Wang, 2024. "Towards a representative social cost of carbon," Working Paper Series 0724, Department of Economics, University of Sussex Business School.

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