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Rational Discounting for Regulatory Analysis

dc.contributor.authorViscusi, W. Kip
dc.identifier.citation74 U. Chi. L. Rev. 209 (2007)en_US
dc.description.abstractThis Article examines the economic basis for what is termed "rational discounting," which entails full recognition of policy effects over time and exponential discounting at a riskless rate of return. Policies often cannot be ranked unambiguously in terms of their present or future orientation. Both failure to discount and preferential intergenerational discounting generate inconsistencies and economic anomalies. Office of Management and Budget (OMB) discounting guidelines now stipulate more reasonable discount rates than earlier guidelines, but err in permitting open-ended preferential rates for intergenerational effects. This Article presents a methodology for monetizing the value of statistical life for people of different ages and at different points in time. Review of regulatory analyses indicates increased consistency of discounting practices. However, an examination of two policies with intergenerational effects, stratospheric ozone regulation and nuclear waste storage at Yucca Mountain, reveals failures to adopt a rational discounting approach. The influence of behavioral anomalies such as hyperbolic discounting may make full recognition of intertemporal effects in benefit-cost analysis more consequential than the use ofpreferential discount ratesen_US
dc.format.extent1 PDF (39 pages)en_US
dc.publisherUniversity of Chicago Law Reviewen_US
dc.subject.lcshDiscount -- United Statesen_US
dc.subject.lcshVital statistics -- United States -- Economic aspectsen_US
dc.subject.lcshEnvironmental policy -- Economic aspects -- United Statesen_US
dc.subject.lcshHazardous wastes -- Government policy -- United Statesen_US
dc.titleRational Discounting for Regulatory Analysisen_US

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