Pricing the Planet's Future: The Economics of Discounting in an Uncertain World

Abstract

Ben Groom of London School of Economics reviews, "Pricing the Planet's Future: The Economics of Discounting in an Uncertain World" by Christian Gollier. The Econlit abstract of this book begins: "Explores recent advances in the field of the social discount rate and considers how society should value the future in this context. Discusses three ways to determine the discount rate; the Ramsey rule; extending the Ramsey rule to an uncertain economic growth; random walk and mean-reversion; Markov switches and extreme events; parametric uncertainty and fat tails; the Weitzman argument; a theory of the decreasing term structure of discount rates; inequalities; discounting nonmonetary benefits; alternative decision criteria; evaluation of risky projects; the option value of uncertain projects; and evaluation of nonmarginal projects. Gollier is Professor of Economics at the University of Toulouse and Director of the Toulouse School of Economics."

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