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Discounting under inequality and lobbyists disagreement

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  • Mahdi Mousavi
  • Mahdi Kohan Sefidi

Abstract

The appropriate discount rate for evaluating policies is a critical consideration in economic decision-making. This paper presents a new model for calculating the derived discount rate for a society that includes different groups with varying desirable discount rates. The model takes into account equality in society and is designed to be used by social planners. The derived discount rate is a useful tool for examining the social planner's approach to policies related to the future of society. If the discount rate is determined correctly, it can help determine the amount of growth and equality in society, as well as the level of attention paid to long-term public projects. The model can be customized for different distributions of wealth and discount rates, allowing researchers to extract desired results. Analysis of the model shows that when equality in society is considered, the derived discount rate is lower than the result obtained using Hamilton's method. Social planners must consider that this may increase disagreement in more consuming groups of society at first.

Suggested Citation

  • Mahdi Mousavi & Mahdi Kohan Sefidi, 2025. "Discounting under inequality and lobbyists disagreement," Papers 2502.05342, arXiv.org.
    • Handle: RePEc:arx:papers:2502.05342
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    References listed on IDEAS

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    5. Millner, Antony & Healey, Andrew, 2018. "Discounting by committee," LSE Research Online Documents on Economics 90246, London School of Economics and Political Science, LSE Library.
    6. Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(2), pages 265-286.
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