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Economics and the Future

Time and Discounting in Private and Public Decision Making

Edited by David J. Pannell and Steven G.M. Schilizzi

Economics and the Future tackles the discounting issue from a number of angles, ranging from relatively short-term private financial decisions, to very long-term public issues spanning generations. The authors present differing perspectives and original ideas in a style that remains accessible while addressing some of the more difficult questions about discounting in theory and practice. It reveals that the economic issues regarding time are embedded in a broader social, ethical and philosophical context.
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Chapter 12: Time Will Tell: Pending Questions on Discounting

Steven G.M. Schilizzi and David J. Pannell


Steven G.M. Schilizzi and David J. Pannell SUMMARY This chapter brings together the contributions of the book to identify the pending questions for future research. The questions identified can be organized under three broad headings: discounting in private decision making, discounting in public decision making, and discounting the distant future. Perhaps the fundamental problem underlying all discounting issues is that it is basically a financial technique that has been extrapolated into the broader economic sphere. The assumptions underlying this extrapolation may not have been submitted to a sufficiently thorough analysis. In particular, the intimate links between the definitions of capital, the net productivity of the economy, market interest rates and discounting have not been fully unravelled; nor have the links between scarcity and productivity; and nor have the links between efficiency, equity and uncertainty. It is suggested that until these issues are resolved, some degree of arbitrariness will remain inevitable in any approach to discounting outside the realm of pure finance. 12.1 INTRODUCTION The chapters in this book cover a number of important issues, but they certainly do not resolve all problems related to discounting. In this chapter we identify questions that we consider remain to be resolved. We hope that identifying these questions may help to shape future research agendas in this area. We distinguish the following three areas: discounting in private decision making, discounting in public decision making, and discounting the distant future. 169 170 Economics and the Future 12.2 DISCOUNTING IN PRIVATE DECISION MAKING How should one...

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