Coase-Sandor Working Paper Series in Law and Economics
Publication Date
2005
Publication Title
Law & Economics Working Papers
Abstract
There is an elaborate debate over the practice of "discounting" regulatory benefits, such as environmental improvements and decreased risks to health and life, when those benefits will not be enjoyed until some future date. Economists tend to think that, as a general rule, such benefits should be discounted in the same way as money; many philosophers and lawyers doubt that conclusion on empirical and normative grounds. Both sides neglect a simple point: Once government has converted regulatory benefits into monetary equivalents, what is being discounted is merely money, not regulatory benefits as such. No one seeks to discount health and life—only the money that might be used to reduce threats to these goods. To be sure, cost-benefit analysis with discounting can produce serious problems of intergenerational equity; but those problems, involving the obligations of the present to the future, require an independent analysis. Failing to discount will often hurt, rather than help, future generations. Solutions to the problem of intergenerational equity should not be conflated with the question whether to discount.
Number
252
Recommended Citation
Cass R. Sunstein & Arden Rowell, "On Discounting Regulatory Benefits: Risk, Money, and Ingergenerational Equity" (John M. Olin Program in Law and Economics Working Paper No. 252, 2005).
Additional Information
Chicago Unbound includes both works in progress and final versions of articles. Please be aware that a more recent version of this article may be available on Chicago Unbound, SSRN or elsewhere.