Discount rate for policy analysis tied to real income growth rate.
The article discusses how to determine the discount rate for policy analysis based on principles of fairness between generations. By using a simple tool, researchers found that the discount rate should be equal to the growth rate of real per capita income, around 2%. This rate is in line with recommendations from the U.S. Office of Management and Budget. The study shows that this discount rate is well-defined for a society with different income levels and is supported by valuing human lives equally.