Does ‘better’ discounting lead to ‘worse’ outcomes in long-run decisions? The dilemma of hyperbolic discounting

Winkler, Ralph (2006). Does ‘better’ discounting lead to ‘worse’ outcomes in long-run decisions? The dilemma of hyperbolic discounting. Ecological economics, 57(4), pp. 573-582. Elsevier 10.1016/j.ecolecon.2005.05.013

[img] Text
boris2.pdf - Published Version
Restricted to registered users only
Available under License Publisher holds Copyright.

Download (155kB) | Request a copy

The shortcomings of conventional discounting, especially in the context of long-run environmental problems, have been extensively discussed in the literature. Recently, hyperbolic discounting, i. e. discounting at declining instead of constant discount rates, has attracted a lot of interest among both scientists and politicians. Although there are compelling arguments for employing hyperbolic discounting, there are also pitfalls, which have to be pointed out. In this paper I show that the problem of time-inconsistency, an inherent characteristics of hyperbolic discounting, leads to a potential clash between economic efficiency and intergenerational equity. As an example, I refer to the weak progress in the controlling of greenhouse gas emissions under the Kyoto protocol. As the problem of time-inconsistency cannot be solved on economic grounds alone, there is a need for an intergenerational moral commitment.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
10 Strategic Research Centers > Oeschger Centre for Climate Change Research (OCCR)

UniBE Contributor:

Winkler, Ralph

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0921-8009

Publisher:

Elsevier

Language:

English

Submitter:

Ralph Winkler

Date Deposited:

28 Aug 2014 09:15

Last Modified:

11 Feb 2015 13:16

Publisher DOI:

10.1016/j.ecolecon.2005.05.013

BORIS DOI:

10.7892/boris.49826

URI:

https://boris.unibe.ch/id/eprint/49826

Actions (login required)

Edit item Edit item
Provide Feedback