Abstract

Discussions of the discount rate have recently come to new prominence as a result of the growing importance of economic models of climate change. This text makes two claims about the appropriateness of discounting the utility of future generations. First, genuine discounting in the sense of ascribing a certain weight to the utility of future generations is not only wrong but primarily unnecessary; determining a discount rate in this genuine sense is only necessary within frameworks that implausibly prescribe weighing up the utility of present and future generations. Second, "non-genuine" discounting in the sense of taking into account opportunity costs, i.e. the fact that alternative investments to climate mitigation measures have positive rates of return, too, is justified. In addition, it is argued that normative reasoning cannot be escaped in the debate on discounting. To conclude, three reasons are suggested to explain why the discussion on the discount rate is so perplexing.