Discounting the long-distant future: a simple explanation for the Weitzman-Gollier-puzzle

In this paper, we reconsider the debate on Weitzman's (1998) suggestion to discount the long-run future at the lowest possible rate, referring to Gollier (2004) and Hepburn & Groom (2007). We show that, while Weitzman's use of the present value approach may indeed seem questionable, its outcome, i.e. a discount rate that is declining over time, is nevertheless reasonable, since it can be justified by assuming a plausible degree of risk aversion.

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Year of publication:	2008
Authors:	Buchholz, Wolfgang ; Schumacher, Jan
Publisher:	Munich : Center for Economic Studies and ifo Institute (CESifo)
Subject:	Abzinsung \| Intertemporale Allokation \| Entscheidung bei Unsicherheit \| Risikoaversion \| Theorie \| Discount rates \| uncertainty \| risk aversion

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Series:	CESifo Working Paper ; 2357
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	577091581 [GVK] hdl:10419/26402 [Handle]
Classification:	D40 - Market Structure and Pricing. General ; E43 - Determination of Interest Rates; Term Structure Interest Rates ; Q51 - Valuation of Environmental Effects
Source:	EconStor

Persistent link: https://www.econbiz.de/10010264404