Nordhaus's Method for Quantifying Intrinsic Impatience

Two economists are debating how to value future climate change damages within a cost-benefit analysis.

• Economist A argues: 'The well-being of a person living 100 years from now is just as intrinsically valuable as the well-being of a person living today. Our calculations should not devalue future welfare simply because it occurs later in time.'

• Economist B argues: 'Policy should reflect human nature. Individuals are inherently impatient, preferring benefits now rather than later. This same preference should be applied to society as a whole, meaning we should give less weight to the well-being of generations that are far in the future.'

What is the fundamental ethical disagreement that distinguishes these two positions?

The Ethical Core of Discounting

Ethical Frameworks in Project Evaluation

An economist argues that when evaluating long-term policies, such as those addressing climate change, it is necessary to apply a discount rate that reflects the 'intrinsic impatience' observed in human behavior, where individuals value present consumption more than future consumption. Which of the following statements represents an ethical viewpoint that this economist would necessarily reject?

Match each ethical framework or principle related to intergenerational discounting with its corresponding description.

Ethical Assumptions in Long-Term Policy

A policymaker evaluating a long-term environmental project states: 'From an ethical standpoint, the well-being of a person born 100 years from now is as important as the well-being of a person today. We should not systematically devalue their welfare simply due to the passage of time.' Which of the following approaches to calculating the project's net present value is most consistent with this ethical principle?

An economic advisor suggests that when a government evaluates a 200-year infrastructure project, it should use a discount rate that includes a component for 'pure time preference.' What is the most likely ethical justification for this recommendation?

Contrasting Ethical Views on Intergenerational Value