Discounting: reflections on the scientific and ethical dimensions of the debate
by H. Unnerstall
International Journal of Sustainable Development (IJSD), Vol. 6, No. 1, 2003

Abstract: Discounting is still a highly contested element of cost–benefit analysis. From an epistemological point of view, three levels of arguments must be distinguished: the empirical, the conceptual and the ethical level. On the conceptual level, discounting turns out to be a hypothesis that has to be justified empirically. This approach requires a method for a direct (utility-)evaluation of future cash-flows in order to prove that discounting correctly represents changes of utility-values in time. Reacting on ethical criticism, economic theory tends to draw a sharp line between intra- and inter-generational discounting. This is ethically unacceptable as the composition of any generation is arbitrary. Therefore, many intra-generational problems can be reformulated as inter-generational problems and vice versa. There can be only one consistent theory of inter-temporal justice.

Online publication date: Mon, 10-May-2004

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