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Time Preference and Discounting

Elsevier Inc.
DOI: 10.1016/b978-0-12-375678-7.00506-x
  • Decision Making
  • Differential Discounting
  • Discount Rate
  • Discounting
  • Economic Evaluation
  • Health Policy Making
  • Marginal Social Opportunity Cost Of Capital
  • Opportunity Cost
  • Perspectives On Social Choice
  • Present Value
  • Pure Time Preference
  • Social Rate Of Time Preference
  • Social Welfare
  • Time Preference
  • Utility
  • Economics


Abstract Discounting is an important component of economic evaluations, allowing for comparability between costs and benefits experienced at different points in time. Conventional approaches to discounting are founded upon considerations of opportunity cost and time preference. This article explains the rationale behind each of these considerations. Some of the more contentious issues in discounting, such as the merits of differential discounting, are then discussed. The article concludes by reviewing recent papers that have attempted to determine the appropriate discount rates to adopt in the context of health policy making.

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