Hyperbole, Hypocrisy and Discounting that Slowly Fades Away

Mainstream economists have begun voicing disquiet about how dicounting affects values ascribed to the distant future. It has been proposed that discount rates should decline through time. Some reasons for this (hyperbolic discounting by one individual, fair treatment of future generations, different time perspectives of presently living individuals) lead to inconsistent decisions through time. Diminishing marginal utility provides a robust and stable justification for discounting. Combination of different income groups, different goods and different scenarios yields discount functions in which discount rate tends to decline, though not always similarly. Uncertainty about future return on investment affects discounting arguments based on compensation or endowment of future generations, but drives these arguments in opposite directions. Time preference rates so derived have no normative significance. The most politically appealing argument for declining discounting is that it rejects environmentally damaging projects, and supports the claims of the distant future, without requiring great sacrifice in the present.