Gollier, Christian, Ploeg, Frederick van der and Zheng, Jiakun (2022) The discounting premium puzzle: survey evidence from professional economists. TSE Working Paper, n. 22-1345, Toulouse

There is a more recent version of this item available.

Preview

Text Download (602kB) | Preview

Abstract

We surveyed economists’ attitudes toward adjusting discount rates to the risk profile of public programs.Three-quarters of respondents recommend to use project-specific discount rates. For example, on average, respondents discount railway infrastructures more than hospitals and climate mitigation. But the degree of discount discrimination between distinct risk profiles of different projects is fairly limited in our sample given the differences in risk profiles for these projects. Eco-
-nomic experts thus penalize risky public projects far less than financial markets penalize private investments. We call this the “discount premium puzzle”. Finally, among experts in favor of a single discount rate, there is no consensus on whether it should be based on the average cost of capital in the economy, the sovereign borrowing cost, or the Ramsey rule, which gives rise to disagreement over the level of the recommended discount rate.

Available Versions of this Item

• The discounting premium puzzle: survey evidence from professional economists. (deposited 01 Jul 2022 07:46) [Currently Displayed]
  • The Discounting Premium Puzzle: Survey evidence from professional economists. (deposited 07 Mar 2025 08:48)