A classic paper by the climate economist Martin Weitzman shows that the average discount rate over long periods is set by the lowest plausible rate (as the possibilities of high rates drop out after a short period).
Weitzman did not, however, supply any fundamental justification for his assumption that the effective discount factor is the expectation value of the true discount factor. That assumption is equivalent to the claim that a project should be adopted iff its expected net present value (ENPV) is positive. Gollier (2004) pointed out that if one adopts instead a criterion of positive expected net future value (ENFV), one obtains precisely the opposite of Weitzman’s result: the effective discount rate increases over time, tending as t → ∞ to its maximum possible value. Since neither criterion is obviously inferior to the other, the difference in results generated the so-called ‘Gollier-Weitzman puzzle’.
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In the lively post-2004 debate over the Gollier-Weitzman puzzle (Hepburn & Groom, 2007; Buchholz & Schumacher, 2008; Gollier & Weitzman, 2010; Freeman, 2010; Gollier, 2010; Traeger, 2012a; K. J. Arrow et al., 2014), there is a widespread consensus that something like Weitzman’s original conclusion is correct, although participants to the debate continue to differ significantly over the reasons for this conclusion and the precise conditions under which it holds.
Not really disagreeing with anything you’ve said, but I just wanted to point out that this sentence doesn’t quite acknowledge the whole story. To quote from Hilary Greaves’ “Discounting for public policy: A survey” paper:
The link you just posted seems broken? Hilary Greaves’ Discounting for public policy: A survey is available in full at the following URL.