Fixing Our Public Discounting Systems

IF 5 3区 经济学 Q1 BUSINESS, FINANCE Annual Review of Financial Economics Pub Date : 2023-08-16 DOI:10.1146/annurev-financial-102921-111749
Frédéric Cherbonnier, C. Gollier
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Abstract

Most Western countries use a single discount rate to evaluate public investments and policies. This ignores the cost of risk, in a world where most risk markets exhibit surprisingly large prices of risk. The current discounting guidelines generate a misallocation of capital that entails a large welfare cost. We claim that the well-established asset pricing literature provides a strong normative justification in favor of risk-adjusting discount rates. More specifically, project-specific discount rates should be increasing in the income elasticity of the project's net benefit. This will favor projects whose net benefit materializes preferentially in low-income states, thereby recognizing their insurance benefit ex ante. The intuition is simple, the welfare benefit of the reform is large, and the methodology only requires evaluators to estimate an income elasticity on top of what is required in the current approach. It is time to fix our public discounting systems. Expected final online publication date for the Annual Review of Financial Economics, Volume 15 is November 2023. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.
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修复我们的公共折扣系统
大多数西方国家使用单一贴现率来评估公共投资和政策。这忽略了风险成本,在这个世界上,大多数风险市场都表现出惊人的高风险价格。现行的贴现准则导致资本配置不当,从而带来巨大的福利成本。我们声称,成熟的资产定价文献为风险调整贴现率提供了强有力的规范性理由。更具体地说,项目的具体贴现率应该增加项目净收益的收入弹性。这将有利于净福利优先在低收入州实现的项目,从而提前确认其保险福利。直觉很简单,改革的福利效益很大,方法只需要评估人员在当前方法要求的基础上估计收入弹性。是时候修复我们的公共折扣系统了。《金融经济学年度评论》第15卷预计最终在线出版日期为2023年11月。请参阅http://www.annualreviews.org/page/journal/pubdates用于修订估算。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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26
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