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Tem­po­ral discounting

TagLast edit: Apr 1, 2023, 9:43 PM by Pablo

Temporal discounting (also called time discounting) is the discounting of the value of a good the further into the future it is expected to be realized.

People often think that we should value goods in the future less than goods now. We might discount the future for various reasons. For instance, we might simply care less about the future than about the present (this is known as pure time preference). Alternately, we might care just as much about the future but think there is some probability that it will not come about. Someone may, for instance, care less about their income in 40 years because there’s a reasonable chance that they will be dead by then. Various other reasons might apply, depending on the good under discussion.

A discount function shows how the value of a good decreases if it occurs at different times. A common form of discount function is exponential. In this case, the discount rate (in annualized form) is the percentage decrease in the value of a good, one year into the future, compared to now. So if you value a sweet in a year 20% less than having a sweet now, you are using a discount rate of 20%.

It is generally thought that different discount functions should be used for different goods. This is because the reasons to discount apply to different extents for different goods. For instance, I might apply a lower discount rate for helping others than I do for myself, because it’s more likely that (some) other people will be around in 60 years time than it is that I will still be alive in 60 years time.

Members of the effective altruism community have often argued against pure time discounting, and so for lower discounting of future welfare. This has contributed to some people focusing on issues relating to the long-run future.

Further reading

Cotton-Barratt, Owen (2020) Discounting for uncertainty in health, in Nir Eyal et al. (eds.) Measuring the Global Burden of Disease: Philosophical Dimensions, Oxford: Oxford University Press, pp. 243–256.

Greaves, Hilary (2017) Discounting for public policy: a survey, Economics and philosophy, vol. 33, pp. 391–439.

Ord, Toby & Robert Wiblin (2013) Should we discount future health benefits when considering cost-effectiveness?, Giving What We Can, May 1.
Debate from researchers in the community.

In Defence of Tem­po­ral Dis­count­ing in Longter­mist Ethics

𝕮𝖎𝖓𝖊𝖗𝖆Nov 13, 2022, 9:30 PM
17 points
5 comments3 min readEA link

[Link] Dis­count­ing for un­cer­tainty in health

Owen Cotton-BarrattMay 7, 2015, 6:43 PM
4 points
0 comments1 min readEA link

Es­ti­mat­ing the Philan­thropic Dis­count Rate

MichaelDickensJul 3, 2020, 4:58 PM
81 points
21 comments40 min readEA link

EA read­ing list: re­place­abil­ity and discounting

richard_ngoAug 3, 2020, 10:10 AM
12 points
2 comments1 min readEA link

Plain(er) English Rewrite of ‘Dis­count­ing for Public Policy: A Sur­vey’ by Hilary Greaves

jojo_leeApr 26, 2020, 3:34 AM
13 points
0 comments2 min readEA link

In­com­pat­i­bil­ity of moral re­al­ism and time discounting

wuschelDec 12, 2020, 6:47 PM
16 points
6 comments8 min readEA link

[Question] Cli­mate dis­count­ing: How do you value one tonne of CO2eq averted to­day ver­sus (say) 30 years from now?

SanjayFeb 12, 2020, 4:41 PM
21 points
3 comments1 min readEA link

On dis­count rates

William_MacAskillJul 22, 2013, 4:00 AM
2 points
0 comments1 min readEA link

Against the So­cial Dis­count Rate (Cowen & Parfit) - Weak refutations

Jørgen Ljønes🔸Aug 12, 2020, 3:06 PM
31 points
3 comments5 min readEA link

Fu­ture peo­ple might not ex­ist

Indra Gesink 🔸Nov 30, 2022, 7:17 PM
18 points
0 comments4 min readEA link

A re­view of GiveWell’s dis­count rate

Rethink PrioritiesNov 21, 2023, 8:59 PM
55 points
3 comments6 min readEA link
(rethinkpriorities.org)

Time prefer­ences for im­pact in the EA com­mu­nity (data from the 2023 EA Sur­vey Sup­ple­ment)

Jamie EAug 12, 2024, 2:59 PM
47 points
1 comment2 min readEA link

Re­v­erse-Eng­ineer­ing the Philan­thropic Dis­count Rate

MichaelDickensJul 9, 2021, 6:32 PM
30 points
0 comments19 min readEA link

Thoughts on “A case against strong longter­mism” (Mas­rani)

MichaelA🔸May 3, 2021, 2:22 PM
39 points
33 comments2 min readEA link

Fu­ture Bias – Does To­mor­row’s Pain Hurt More Than Yes­ter­day’s?

jachym_simkoJan 18, 2025, 1:12 PM
5 points
0 comments10 min readEA link

SoGive re­view of GiveWell’s dis­count rates

SoGiveNov 1, 2022, 12:52 PM
17 points
1 comment16 min readEA link

List of rea­sons to dis­count the welfare of fu­ture generations

freedomandutilityDec 17, 2022, 2:26 PM
5 points
5 comments1 min readEA link

The dis­count rate effec­tively de­ter­mines whether long- or near-ter­mism is the best use of philan­thropic resources

FroolowSep 6, 2022, 2:52 PM
14 points
8 comments6 min readEA link

[Link] Mo­ral In­ter­lude from “The Wizard and the Prophet”

Milan GriffesSep 27, 2019, 6:42 PM
13 points
8 comments8 min readEA link

Should we dis­count fu­ture peo­ple in pro­por­tion to the prob­a­bil­ity of them not ex­ist­ing?

JosephDec 17, 2022, 2:15 PM
8 points
3 comments2 min readEA link

Ex­tinc­tion risk and longter­mism: a broader cri­tique of Thorstad

Matthew RendallApr 21, 2024, 1:55 PM
31 points
5 comments3 min readEA link

The Cry­on­ics re­duc­tio against pure time prefer­ence: a rhetor­i­cal low-hang­ing fruit—or “Do we dis­count the fu­ture only be­cause we won’t live in it?”

RamiroAug 3, 2021, 3:06 PM
9 points
6 comments6 min readEA link