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Health technology assessment (HTA) guidance often recommends a 3% real annual discount rate, the appropriateness of which has received limited attention. This article seeks to identify an appropriate rate for high-income countries because it can influence projected cost-effectiveness and hence resource allocation recommendations. The author conducted 2 Pubmed.gov searches. The first sought articles on the theory for selecting a rate. The second sought HTA guidance documents. The first search yielded 21 articles describing 2 approaches. The "Ramsey Equation" sums contributions by 4 factors: pure time preference, catastrophic risk, wealth effect, and macroeconomic risk. The first 3 factors increase the discount rate because they indicate future impacts are less important, whereas the last, suggesting greater future need, decreases the discount rate. A fifth factor—project-specific risk—increases the discount rate but does not appear in the Ramsey Equation. Market interest rates represent a second approach for identifying a discount rate because they represent competing investment returns and hence opportunity costs. The second search identified HTA guidelines for 32 high-income countries. Twenty-two provide no explicit rationale for their recommended rates, 8 appeal to market interest rates, 3 to consistency, and 3 to Ramsey Equation factors. Declining consumption growth and real interest rates imply HTA guidance should reduce recommended discount rates to 1.5 to 2+%. This change will improve projected cost-effectiveness for therapies with long-term benefits and increase the impact of accounting for long-term drug price dynamics, including reduced prices attending loss of market exclusivity. • Health technology assessment guidance often recommends an annual discount rate of 3%, but most guidance provides no supporting rationale. The literature advances 2 approaches to identify an appropriate rate: (1) bottom up (the Ramsey Equation) sums contributing factors, but economists disagree on their values; (2) real interest rates can represent returns available from other investments, but which market rate to use is unclear. • Pragmatically, we can start with the commonly recommended 3% discount rate and consider trends suggesting recent changes to this value. Projected declines in consumption growth and observed declines in real interest rates suggest health technology assessments should now recommend a discount rate of 1.5% to the low 2% range. • Using a lower discount rate will improve projected cost-effectiveness for therapies with long-term (eg, lifetime) benefits and increase the impact of accounting for long-term drug price dynamics, including reduced prices attending loss of market exclusivity. [ABSTRACT FROM AUTHOR]

• We use choice tasks responses from Poland to elicit individual time preferences. • The sample is representative of the Polish 50+ population. • Data are collected as part of the Survey of Health Ageing and Retirement in Europe. • Quasi-hyperbolic time discounting model best fits our data. • Numeracy, employment and marital status along with household income correlate with patience. We explore intertemporal decision-making in later life by looking at temporal preference heterogeneity among older individuals. Using choice tasks responses from Poland collected as part of the Survey of Health, Ageing, and Retirement in Europe (SHARE), we elicit individual time preferences using competing discounting specifications. With the formulation that best fits our data, we examine which individual characteristics drive the estimated heterogeneity in later life time preferences. Individual numerical abilities, labour and marital status, as well as household income turn out to be significant correlates of patience. Our analysis also provides methodological guidance for instrument design with the aim of eliciting time preferences in a general survey setting. [ABSTRACT FROM AUTHOR]

This article sets out to identify an appropriate hurdle rate range for commercial space resource development projects, should such an industry eventuate. There has been little consistency in the use of hurdle rates and discount rates in the evaluation of space resource projects proposed to date. The article uses two approaches to determine an appropriate hurdle rate for the economic evaluation of such projects. Firstly, the article reviews hurdle rate usage in three industries with parallels to a potential space resource industry – the mining industry, the oil & gas industry, and the aerospace industry. The venture capital sector is also considered. The article finds that there is limited direct reference to the hurdle rates used in these industries and therefore uses expected project IRR and corporate Cashflow Return on Investment (CFROI) as proxies to quantify hurdle rates in each industry. Secondly, the article develops a Risk Build Up Method (RBUM) to determine appropriate hurdle rates for hypothetical commercial space resource development projects by quantifying the potential commercial risk to which such projects could be exposed. The RBUM process correlates a commercial risk score quantified on a project by project basis with a hurdle rate risk premium scale to determine an appropriate hurdle rate for such projects. Finally, the article discusses discount rate treatment in the analogue industries, with a view to proposing a consistent approach to the use of discount rates in a potential space resources industry. The article finds that hurdle rates in the range of 25% could be appropriate for potential commercial space resource development projects, depending on the perceived risk of the project, and assuming a suitable legal/regulatory regime is in place. This hurdle rate range and the RBUM process could evolve over time should such an industry eventuate and ultimately mature. The article also proposes that a 'standard' industry discount rate of 10% be utilised in order to facilitate the comparison of project to project valuations, based on the discount rate convention for reporting requirements in the US oil & gas industry. [ABSTRACT FROM AUTHOR]

Perennial energy crops compete with conventional annual crops in land-use. The production price of biomass from perennial energy crops is thus derived on the basis of the opportunity cost principle. This means that in deciding whether to grow perennial energy crops, the farmer will demand a price for biomass that will at least provide him with the same economic effect over the lifetime of the plantation in the form of the present value of net cash flows over the lifetime of the energy crop plantation. The level of discounts used to discount the cash flows associated with (annual) conventional crops and perennial energy crops plays an important role in modelling the biomass production price. The business risk associated with the two types of crops is different, with generally higher risk associated with perennial energy crops. This study focuses on developing a methodology to incorporate the risk associated with growing conventional and energy crops and to derive the discount rate for both crop groups. The methodology is demonstrated using the example of the Czech Republic and the price level in 2021. The analysis using Czech data led to a discount rate of 8.5 % for conventional crops and 11.5 % for perennial energy crops. The increase in the discount value for perennial energy crops leads to an increase in the expected biomass sales price by a producer. The sensitivity of the biomass production price level to an increase in the discount rate is lower for Miscanthus plantations compared to short rotation coppice. [Display omitted] • Perennial energy crops have a higher business risk than conventional crops. • The higher business risk of perennial crops can be compensated by a 3 % risk premium in discount rate. • SRCs biomass economics are more sensitive to the discount rate than Miscanthus. [ABSTRACT FROM AUTHOR]

This paper contributes to the theory of average rate of change (ARC) measurement. We use an axiomatic approach to generalize the conventional ARC measures (such as the difference quotient and the continuously compounded growth rate) in several directions: to outcome variables with arbitrary connected domains, to not necessarily time-shift invariant dependence on time, to more general (than an interval) time sets, to a path-dependent setting, and to a benchmark-based evaluation. We also revisit and generalize the relationship between the ARC measurement and intertemporal choice models. • Average rate of change (ARC) measurement is related to intertemporal choice. • An axiomatic approach to ARC measurement is developed. • Various generalizations of the conventional ARC measures are proposed. [ABSTRACT FROM AUTHOR]

Achieving universal electricity access in sub-Saharan Africa – a milestone of SDG 7 – requires about $30bn annually until 2030 on the top of baseline investment. The private sector plays a key role in supplying these investment flows, given the governmental budgetary constraints. Yet, private players face numerous sources of risk in their infrastructure investment decisions. This risk is usually factored in using a discount rate. To allow for a more realistic evaluation of the role of the investment environment in financing energy access, here we introduce the Electricity Access Governance Index (EAGI), a composite index of energy sector regulatory quality, energy sector governance, and market risk. The index is implemented through a discount rate conversion into a bottom-up integrated electricity planning model (IMAGE-TIMER) to evaluate the role of different sources of risk for electrification investment dynamics. Our results show that the adoption of decentralised systems for achieving universal energy access requires governance and institutional reform to lower discount rates faced by companies and households and mobilise private finance. Failure to reform investment environments will likely hamper the uptake of decentralised systems even in areas where they would be the techno-economically least-cost electrification option, and thus likely leave many without electricity. • Private investment key for universal electricity access in sub-Saharan Africa • Regulatory, market and governance risks limit private energy investment. • Electricity Access Governance Index calculated to estimate private discount rates • Bottom-up electricity access modelling in SSA with IMAGE-TIMER model • Mass uptake of decentralised systems requires reducing private discount rates. [ABSTRACT FROM AUTHOR]

Traditional economic analysis techniques, such as Cost-Benefit Analysis (CBA), often form a critical input to decision-making when attempting to manage and invest in disaster risk-reduction options. However, these techniques tend to be applied narrowly and uniformly across affected parties and contexts. Although one of the main tenets of CBA is to improve social welfare, the disregard of heterogenous valuation of income is still evident in most CBA protocols. It can be argued that this is highly inappropriate when intra- and inter-generational income inequality is among the most pressing issues facing current governments. Contrary to the traditional application of CBAs, the literature has demonstrated that individuals with different levels of income value impacts differently. This study uses a fuel disruption case study in New Zealand to illustrate one of the most essential concepts in economics, the one of a utility function representing well-being, and its more realistic treatment through the concept of marginal utility, to improve the current implementation of CBAs. Specifically, it analyses the case study using a dynamic economy-wide model under alternative evaluation approaches considering: differing risk aversion levels across individuals as well as intra- and inter-generational inequality aversion by society. The extended CBA demonstrates a relatively simple and practical way to provide more equitable estimation of the benefits of risk reduction strategies. [ABSTRACT FROM AUTHOR]

In the economic analysis of CBFM, people's discount rates are assumed exogenous and same for all goods. We examined the validity of this assumption by eliciting the discount rates of households for grass, timber, fuelwood and money, and analyzed the impacts of various personal and economic factors on households' discount rates. We found that time preferences are endogenous and good-specific. A good proportion of households have infinite discount rates for forest goods. The mean values of monthly discount rates, for households that indicated finite discount rates, are 0.67 for timber, 6.83 for fuelwood, 55.49 for grass, and 3.47 for money. The availability of alternative sources and current consumption of the forest goods are two main determinants of a household's discount rates. The study provides many useful insights for the design and implementation of CBFM programs: the concept of "mental accounting" should be used for economic analyses of CBFM programs, different management strategies should be adopted for different forest goods, and alternative sources should be provided to meet the current needs of the households. [ABSTRACT FROM AUTHOR]

Abstract A growing literature has highlighted the variables and parameters that most affect the technical feasibility and the economic viability of the measures meant to improve building energy efficiency. This paper discusses the results of a literature review, which focuses on the studies that deal with three economic parameters: the price to be paid for the energy supply, the energy inflation rate, and the discount rate used to convert future cash flows to a present value, namely, an upfront lump-sum equivalent. A specific co-occurrence analysis of terms is performed on the titles and abstracts of the examined documents. The representation of the results allows recognizing several significant clusters and network relationships. Moreover, that literature review enables to identify two well-established research strands. The first involves the relationship between energy prices and the profitability of efficiency-related investments. The second research branch points at the pivotal role played by the discount rate when evaluating the investments in energy-efficient measures. [ABSTRACT FROM AUTHOR]

Inflation is one of the most important indicator for economy and markets. Inflation represents a rate of rising of general level of prices for goods and services in regard to the currency falls of purchasing power. Although there many investigation of inflation phenomenon there is still missing gap about the factors analyzing which have influence on inflation. In this paper is applied multiple regression analysis to determine how consumer price index, monetary aggregates, discount rate, exchange rate affect inflation. [ABSTRACT FROM AUTHOR]

The European Union's Directive on energy performance of buildings emphasizes the need to take cost-effectiveness into account when measures are implemented for improved building energy efficiency. In this study, we investigate cost-effective energy renovation measures for a district heated building under different contexts, including varied locations, energy supply systems and economic scenarios. We determine the final and primary energy savings of cost-effective energy renovation packages for the building in the different contexts. The measures analysed include: improved insulation for attic floor, basement walls, and exterior walls; improved windows and doors; resource-efficient taps; heat recovery of exhaust ventilation air; energy-efficient household appliances and lighting. We consider three existing Swedish energy supply systems of varying district heat production scale and tariffs, and also plausible renewable-based energy supply systems. Our analysis calculates the final energy savings of the measures including the cost-effective renovation packages on hourly basis and links these to the different energy supply systems. The cost-effectiveness analysis is based on a double-stage optimization method, considering total and marginal investment costs of renovation measures as well as associated net present values of total and marginal cost savings. The results show that significant final and primary energy savings can be achieved when energy renovation measures are implemented for the building in the different contexts. This study shows that heat demand in existing Swedish building could be about halved while electricity use may be reduced considerably with cost-effective energy renovation measures. The economic viability of the renovation measures is sensitive to the economic regimes especially discount rates and energy price increase. [ABSTRACT FROM AUTHOR]

A growing literature has focused on the economic viability of energy retrofit in buildings. As regards the valuation tools, the Life-Cycle Cost (LCC) method has established itself among the leading approaches. The results are usually affected by a core of influential, uncertain parameters: energy supply cost and energy price changes. Monte Carlo (MC) simulation may be integrated with LCC analysis to deal with that uncertainty. In this study, we apply an LCC and MC-based analytical model to a case study. Several retrofit scenarios are defined to improve the poor energy performance of a public housing building. The less investment-intensive alternative enable to achieve a 27% energy saving in comparison to the building as is, while the more investment-intensive alternative allows reducing consumptions by about two-thirds. We find that the scenarios characterized by lower upfront costs are more likely to show lower LCCs, regardless of the energy price. The novelty of this study lies in the fact that we show the prominence of the discount rate, which is a remarkable source of additional uncertainty. We find that the discount rate affects the results four times as much as the energy price; therefore, its estimation is critical to the soundness of thermo-economic evaluations. [ABSTRACT FROM AUTHOR]

Hydrogen, the deemed future transportation fuel can be produced from nuclear assisted energy sources. Assessment of economics of hydrogen production using energy from nuclear power plants is vital for asserting its competitiveness with competing technologies. A generic method is presented in this paper to evaluate Levelised Hydrogen Generation Cost, based on the discounted cash flow analysis. The method is illustrated by consideration of a typical case of hydrogen production via conventional electrolysis using electrical energy supplied from a pressure tube type boiling light water cooled heavy water moderated reactor concept. [ABSTRACT FROM AUTHOR]

In this study we present a method for analysis of cost-effectiveness of end-use energy efficiency measures and demonstrate its application for modelling a wide range of energy renovation measures for a typical 1970s multi-family building in Sweden. The method integrates energy balance and bottom-up economic calculations considering total and marginal investment costs of energy efficiency measures as well as net present value of total and marginal savings of the measures. The energy renovation measures explored include additional insulation to basement walls, exterior walls, and attic floor, improved new windows, efficient electric appliances and lighting, efficient water taps, glazed enclosed balcony systems, and exhaust air ventilation heat recovery systems. The measures are analysed first individually and then designed to form economic packages. Our results show that improved windows give the biggest single final energy savings while resource-efficient taps is the most cost-effective measure for the building. We find that the cost-effectiveness of the energy renovation measures is sensitive to real discount rates and energy price increases. Cost-optimal final heat savings varies between 34% and 51%, depending on the choice of real discount rate and energy price increase. The corresponding electricity savings varies between 35% and 43%. This study shows a method and the significance of various technical and economic-related parameters in achieving deep energy savings cost-efficiently. [ABSTRACT FROM AUTHOR]

Levelized Cost of Energy (LCOE) is a popular metric used to calculate the expected lifetime costs of a generation project on a unit-cost basis. Contrary to common understanding, however, LCOE is not a discounted metric but rather an undiscounted metric that distorts comparisons, with the distortion increasing with discount rate and with the length of analysis period. A different metric, the present value of the cost of energy (PVCOE), is proposed. [ABSTRACT FROM AUTHOR]

The research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug and biologics development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2558 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars). [ABSTRACT FROM AUTHOR]

Human health is considered the outcome of intertemporal choices under tradeoffs between a small immediate reward and a larger delayed reward. Health-related behaviors are thus affected by personal time preferences. Based on an Internet-based survey conducted on Japanese adults, we contribute to the literature by incorporating the multifaceted nature of time discounting in an analysis of the associations between time preference and health-related behaviors. We find that, first, less patient respondents tend to exhibit worse health-related attributes. Second, present bias, which is measured by the degree of declining impatience, is positively associated with unhealthy behaviors for naïve respondents, who are unaware of their self-control problem. Third, such associations cannot be found in sophisticates, who are aware of that. As a policy implication, direct intervention policies, including “nudging,” are more effective than a commitment device provision in correcting the unhealthy behaviors due to present bias. Fourth, the sign effect, wherein future losses are discounted at a lower rate than future gains, is negatively associated with unhealthy outcomes, although at weak statistical significance levels. [ABSTRACT FROM AUTHOR]

• Our paper measures time preference for hypothetical rewards via the standard Multiple Price list (MPL) format. • We employ an incentivised experiment using the unique reference numbers of banknotes to determine an individual's willingness to save money. • Hypothetically derived time preference parameters do not predict either incentivised choices in our experiment or actual saving decisions. • Our results remain robust to confounding factors within our incentivised experiment (fungibility and reputation effects). Time preferences are an important determinant of decision-making and are widely measured through hypothetical survey questions. However, the extent to which they offer a good representation of time discounting remains largely unexplored. This paper estimates time preference parameters using a commonly-applied hypothetical elicitation method. We explore whether our estimated parameters correlate with actual and incentivized behaviours related to time preferences. First, we consider the correlation between our hypothetical measures and the result of an incentivised experiment using the unique reference numbers of banknotes as a means of determining an individual's willingness to save money. Individuals are given a banknote and informed that if they chose to retain this specific note for a randomly assigned period of time (2, 7 or 14 days) they will receive a second banknote, in effect doubling their initial endowment. Second, we consider the correlation between hypothetical measures and an individual's observable saving behaviour, including ownership of a savings account and participation in a Rotating Credit and Savings Association (ROSCA). Overall, our results show that hypothetically-derived time preference parameters are not significantly correlated with our measures of actual or incentivized behaviour. We explore the extent to which our results are due to limited power and find that a version of our results comparable to the relevant literature can detect effect sizes in line with similar studies. Furthermore, we recognise that our incentivized experiment will be a noisy reflection of time discounting and subject to confounding factors, such as the inherent fungibility of money. We provide ancillary evidence suggesting that our main results remain robust to these considerations and others. [ABSTRACT FROM AUTHOR]

Integrated assessment models have become the primary tools for comparing climate policies aimed at reducing greenhouse gas emissions. Such policies have often been identified by considering a planner who seeks to make optimal trade-offs between the costs of carbon abatement and the economic damages from climate change. The planning problem has been formalized as one of optimal control, the objective being to minimize the total costs of abatement and damages over a time horizon. Studying climate policy as a control problem presumes that a planner knows enough to make optimization feasible, but in practice, physical and economic uncertainties abound. Manski, Sanstad, and DeCanio (2021) proposed and studied use of the minimax-regret (MMR) decision criterion to account for deep uncertainty in climate modeling. Here we study choice of climate policy that minimizes maximum regret with deep uncertainty regarding both the correct climate model and the appropriate time discount rate to use in intergenerational assessment of policy consequences. The analysis considers a range of discount rates to express both empirical and normative uncertainty about the appropriate magnitude of this parameter. The findings are novel and informative. The MMR analysis points to use of a relatively low discount rate of 0.02 for climate policy. The MMR decision rule keeps the maximum future temperature increase below 2 °C above the 1900–09 level for most of the parameter values used to weight costs and damages. • We address deep uncertainty in climate policy modeling using the minimax regret (MMR) approach from formal decision theory. • Deep uncertainty arises because of uncertainties about the geophysical processes governing the climate and the future evolution of technology and the economy. • Additionally, "normative uncertainty" exists because of disagreement or lack of knowledge about the appropriate discount rate. • In our computational analysis, the MMR rule indicates that climate policy should act as if the discount rate were in the neighborhood of 2% per annum. [ABSTRACT FROM AUTHOR]

Perhaps the most understudied ecosystem services are related to socio-cultural values tied to non-material benefits arising from human–ecosystem relationships. Bequest values linked to natural ecosystems can be particularly significant for indigenous communities whose livelihoods and cultures are tied to ecosystems. Here we apply a discrete choice experiment (DCE) to determine indigenous fishers' preferences and willingness-to-pay for bequest gains from management actions in a locally managed marine area in Madagascar, and use our results to estimate an implicit discount rate. We validate our results using a unique rating and ranking game and other mixed methods. We find that bequest is highly valued and important; respondents were willing to pay a substantial portion of their income to protect ecosystems for future generations. Through all of our inquiries, bequest emerged as the highest priority, even when respondents were forced to make trade-offs among other livelihood-supporting ecosystem services. This study is among a relative few to quantify bequest values and apply a DCE to model trade-offs, value ecosystem service flows, and estimate discount rates in a developing country. Our results directly inform coastal management in Madagascar and elsewhere by providing information on the socio-cultural value of bequest in comparison to other ecosystem service benefits. [ABSTRACT FROM AUTHOR]

This paper aims to propose consistent Life Cycle Assessment and Life Cycle Costing metrics and indices and to test them to assess an anaerobic digester on a dairy farm. The method is based on a graphic representation of the environmental Life Cycle Impact and economic Life Cycle Cost Differentials. Performance indices are the Internal Rate of Return (discount rate that makes the total cost differential over the lifetime equal to zero), the Breakeven Price of Electricity (unit price of electricity that makes the total cost differential over the life time equal to zero) and the Impact Savings Ratio (the total impact reduction divided by the detrimental impacts generated). A dairy digester producing electricity, chosen as case study yields a substantial carbon footprint reduction close to 0.2 kg CO2e per liter of milk (25% improvement of milk carbon footprint), corresponding to a high Impact Savings Ratio of 34-37. Life Cycle Cost Differentials ranges from -$545 (most favorable) to $808 (least favorable) per cow, depending on electricity price, heat recovery and upfront grant. Economic performances are reflected in the Internal Rates of Return (IRR), that range from -1% to 12%. The Breakeven Price of Electricity ranges from $0.07 to $0.13 per kWh. The effective economic performance is measured by choosing the discount rate equal to the Weighted Average Cost of Capital of the stakeholder. Comparing the IRR to his target rate of return enables the decision maker to check whether its own economic targets are met. [ABSTRACT FROM AUTHOR]

The ‘passive house’ (PH) is a specific, pan-nationally recognised building standard designed to consume 15 kilowatt-hours of space heating energy per square metre of living area per year (kWh/m 2 a), significantly less than most countries’ current standard for a conventional house (CH). Most PHs cost some 5–15% more to build than a CH of equivalent size and layout. Investor-households therefore often enquire as to whether building a PH is economically viable: will the extra cost pay back in the long-run through fuel savings? A number of studies have offered cost-benefit analyses to address this, usually based on modelled heating consumption figures and prescriptive approaches to setting values for unknowable variables such as future fuel price rises and the investor's discount rate. This study offers a novel ‘reality-based, subjectivist’ approach. It uses empirically derived (i.e. real rather than modelled) consumption figures for PHs and CHs, and allows flexibility in setting fuel price increase and discount rates according to investor-households’ subjective judgments. Drawing on a wide range of data from peer-reviewed and non-peer-reviewed studies, it presents sample results in terms of years to amortisation against PH–CH consumption differences, and offers an 11-point decision-making process for would-be investor-households. [ABSTRACT FROM AUTHOR]

In cost-benefit analysis of climate policy there are two main approaches to discounting, each with implications conflicting with our moral intuitions. Thus, discounted utilitarianism implies that we hardly need to protect future generations against climate change, while classical utilitarianism implies that we should reduce our consumption across the board to benefit future generations. The insolubility of the debate derives from the fact that both classical and discounted utilitarianism permit only a single discount rate for all consequences occurring in the same future year, while our intuitions clearly do distinguish between consequences, depending on whether we cause adverse effects on other people's interests and violate their rights. Most people share the moral intuition that we ought to refrain from harming others, and ought to compensate them if we were unable to prevent harm. To regain a reflective equilibrium between such deontological intuitions and economic theory there is a need to accept different discount rates for different situations: a zero consumption discount rate in the case of cost-benefit analysis of measures to prevent wrongful harm to future generations, and standard discounting in all other cases. Applying a zero consumption discount rate means that future generations are automatically largely compensated for climate damage that remains unmitigated. [ABSTRACT FROM AUTHOR]

When seeking to make land conservation decisions, should managers favor actions that will make immediate differences or those promising long-term gains? The choice depends on how individuals weight benefits and costs experienced at different future times, something temporal discount rates can be used to represent. Despite the ubiquity of inter-temporal tradeoffs in conservation decision-making, little is known about time preferences of relevant practitioners. Taking land protection decisions as an example, we use responses from experimental-choice surveys to show practitioners at environmental NGOs display high variability in how they evaluate environmental benefits and costs through time. Participants had a median discount rate of 11.9%, significantly higher than values traditionally used in environmental policy. Moreover, discount rates ranged from 74% to negative values. When asked to compare financial amounts at two future times, practitioners used discount rates that were not significantly different. When asked about an environmental attribute (protected land), they used discount rates that declined through time. We applied such rates to a spatial prioritization model to illustrate how differences we observed in discounting could influence conservation priorities today. We used species persistence in the central and southern Appalachian Mountains as our benefit stemming from protecting land. Through this illustrative application, we show that differences in how practitioners value the future change today's protection priorities, with as little as 43% overlap in counties with the highest conservation return on investment. As the conservation community re-envisions protection goals, how we weight environmental benefits and costs through time will help determine paths forward. [ABSTRACT FROM AUTHOR]

Using a robust measure that captures the market's reaction to analysts' target price releases, we show that the initial stock price reaction corresponds to target prices, but the price drifts in the opposite direction for a long period, resulting in negative cross-sectional predictability. In the U.S. market from 1999 to 2020, the derived long-short portfolio generates a significant one-month ahead return of 0.75% and 10.00% over a year and possesses favorable features: its profit is higher among large and liquid stocks, originates from long positions, and lasts long. Empirical evidence suggests that the return reversal is caused by both discount rate shifts and mispricing correction following target price releases. • We develop a measure that captures the market's reaction to analysts' target prices. • Stock prices drift opposite to target prices causing a return reversal. • The anomaly portfolio earns a significant return over a long period. • The return reversal is caused by both discount rate shifts and mispricing correction. [ABSTRACT FROM AUTHOR]

Objectives: Mifamurtide is an immune macrophage stimulant that when added to standard chemotherapy has demonstrated survival benefit for newly diagnosed osteosarcoma. The objectives of this study were to investigate the cost-effectiveness of adding mifamurtide to standard three- or four-agent chemotherapy for high-grade, resectable, nonmetastatic osteosarcoma following surgical resection and the issues of obtaining robust cost-effectiveness estimates for ultra-orphan drugs, given the shortage of data. Methods: An economic evaluation was conducted from the perspective of the UK’s National Health Service as part of the manufacturer’s submission to the National Institute for Health and Care Excellence. The disease process was simplified to a transition through a series of health states, modeled by using a Markov approach. Data to inform the model were derived from patient-level data of Study INT-0133, published literature, and expert opinion. The final efficacy measure was life-years gained (LYG), and utilities were used to obtain quality-adjusted life-years (QALYs). Results: For a 60-year time frame and a discount rate of 3.5% for outcomes, patients receiving mifamurtide benefited from an average additional 1.57 years of life and 1.34 QALYs, compared with patients receiving chemotherapy alone, giving an incremental cost-effectiveness ratio (ICER) of £58,737 per LYG and £68,734 per QALY. Because treatment effects were both substantial in restoring health and sustained over a very long period, the National Institute for Health and Care Excellence changed its guidance to allow a discount of 1.5% for outcomes to be applied in these special circumstances. By using this discount factor, it was found that patients receiving mifamurtide had an average additional 2.58 years of life and 2.20 QALYs compared with patients receiving chemotherapy alone, resulting in an ICER of £35,765 per LYG and £41,933 per QALY. Conclusion: Mifamurtide’s ICER is cost-effective compared with that of other orphan and ultra-orphan drugs, for which prices and corresponding cost-effectiveness estimates are high. [ABSTRACT FROM AUTHOR]

Abstract: This study examines management's reaction to the SFAS No. 158 requirement to recognize previously disclosed post-retirement benefit obligations on the balance sheet. The results indicate that managers attempted to mitigate the impact of the standard by increasing the assumed pension discount rate in subsequent periods. Further, the discount rate choice was related to the magnitude of the SFAS No. 158 balance sheet adjustment. Specifically, firms with larger required liability adjustments and more volatile pension assets and obligations were more likely to increase their discount rates. The findings have important implications for research regarding the economic consequences of accounting regulations and in particular the debate surrounding recognition versus disclosure since they indicate that managers react to the relocation of information from the financial statement footnotes to the balance sheet. [Copyright &y& Elsevier]

Abstract: Transformation of the renewable and abundant biomass resources into a cost competitive, high performance biofuel can reduce Tennessee's dependence on fossil fuel and enhance energy security. However, there is limited understanding of the potential of biofuel resources, their utilization, and economic potential. This study evaluates the economic feasibility of selected bioenergy crops for Tennessee and compares their cost competitiveness. The selected lignocellulosic feedstock consists of switchgrass and Miscanthus. Financial analysis was used to select feasible feedstock for biofuel production. For each feedstock, net return, feedstock cost per Btu, feedstock cost per gallon of ethanol, breakeven price of feedstock and breakeven price of ethanol were calculated. The analysis focused feedstock for biofuel production over 25 year project period. Preliminary research shows that under current conversion rate, the annual equivalent net revenue from ethanol production from switchgrass and miscanthus was $363/acre and $752/acre respectively. Sensitivity analysis showed that the feedstock cost for gallon of ethanol from switchgrass and miscanthus ranges from $0.52–$0.78 and $0.44–$0.66 per gallon respectively. The estimated breakeven price of ethanol from switchgrass ranges from $1.53 to $1.79/gallon and for miscanthus $1.41–1.67/gallon. [Copyright &y& Elsevier]

Abstract: There is a general consensus among researchers and policymakers that matched savings programs can significantly increase the propensity to save among low-income households. This study offers a unique contribution to the field by testing whether principals and theories from behavioral economics affect the decisions that participants make in these savings programs. Using a sample of people participating in the $aveNYC program, a matched savings program for very low-income households, we test whether information failure, time preference, and financial hardship affected people''s ability to complete the program and receive the match money. We find that future orientation does not significantly impact program completion, but both information failure and financial hardship increase the hazard of early account closure. Although the pool of participants who did not receive the match was small, both information failure and financial hardship had large impacts on the risk of withdrawing the account before receiving a match. We discuss how these findings can inform program design and suggest future research. [Copyright &y& Elsevier]

Abstract: Hyperbolic discounting of delayed rewards has been proposed as an underlying cause of the failure to stick to plans to forego one''s immediate desires, such as the plan to diet, wake up early, or quit taking heroin. We conducted two tests of inconsistent planning in which respondents made at least two choices between a smaller–sooner (SS) and larger–later (LL) amount of money, one several weeks before SS would be received, and one immediately before. Hyperbolic discounting predicts that there would be more choices of SS as it became more proximate—and, equivalently, that among those who change their mind, “impatient shifts” (LL-to-SS) will be more common than “patient shifts” (SS-to-LL). We find no evidence for this, however, and in our studies shifts in both directions were equally likely. We propose that some of the evidence cited on behalf of hyperbolic discounting can be attributed to qualitatively different psychological mechanisms. [Copyright &y& Elsevier]

Abstract: This paper compares the use of capital budgeting techniques of conventional and Islamic financial institutions, using data obtained from a survey of 105 conventional and Islamic financial institutions. Our main aim is to analyze the use of capital budgeting and risk techniques by the two types of financial institutions from a comparative perspective to see whether prohibition of riba makes a difference. Standard difference-of-means tests of the mean scores methods were used to test the hypotheses of the study. The results reveal a number of important conclusions. First, discounted cash flow techniques are found to be more widely used by financial institutions, and among those techniques internal rate of return is the most common. Second, Islamic financial institutions are found to adopt traditional methods that do not comply with the principles of Islamic Sharia''a. Third, a huge gap is found between the theory base of Islamic institutions and some of the practices of those institutions. Fourth, firms'' characteristics, such as size, listing status, sources of revenue and government ownership, have some impact on their decisions to adopt capital budgeting criteria, methods of estimating costs of capital and risk. Finally, the decisions to select particular capital budgeting techniques, cost of capital estimation methods, and risk assessments are partly related to the characteristics of the chief financial officers. [Copyright &y& Elsevier]

Abstract: Hawaii’s agricultural sector has an immense supply of natural resources that can be further developed and utilized to produce biofuel. Transformation of the renewable and abundant biomass resources into a cost competitive, high performance biofuel could reduce Hawaii’s dependence on fossil fuel importation and enhance energy security. The objectives of the study are to evaluate the economic feasibility of selected bioenergy crops for Hawaii and compare their cost competitiveness. The selected feedstock consists of both ethanol and biodiesel producing crops. Ethanol feedstock includes sugar feedstock (sugarcane) and lignocellulosic feedstock (banagrass, Eucalyptus, and Leucaena). Biodiesel feedstock consists of Jatropha and oil palm. The economic analysis is divided into two parts. First, a financial analysis was used to select feasible feedstock for biofuel production. For each feedstock, net return, feedstock cost per Btu, feedstock cost per gallon of ethanol/biodiesel, breakeven price of feedstock and breakeven price of ethanol/biodiesel were calculated. Leucaena shows the lowest feedstock cost per Btu while banagrass has the highest positive net returns in terms of both feedstock price and energy price. The second approach assumes an objective of maximizing net returns. Given this assumption, biofuel producers will produce only banagrass. As an example, the production of bioenergy on the island of Hawaii is illustrated where 74,793 acres of non-prime land having a “warm and moist” soil temperature and moisture regime are available. Using average yields (static optimization), banagrass production on this acreage can yield 8.24 trillion Btus of energy (ethanol). This satisfies the State’s 10% self-sufficiency energy goal of 3.9 trillion Btus by 2010. Incorporating risk through variability in crop yields and biofuel prices separately shows banagrass as having the highest probability for receiving a positive net return. Banagrass is the leading candidate crop for biofuel production in Hawaii and the State of Hawaii ethanol goal can be achieved by allocating non-prime lands for banagrass production without compromising prime lands currently allocated for agricultural food production in Hawaii. Physical, environmental and socio-economic impacts should be accounted for in evaluating future biofuel projects. [Copyright &y& Elsevier]

This paper discusses the interplay between the choice of the discount rate, greenhouse gas mitigation and endogenous technological change. Neglecting the issue of uncertainty it is shown that the Green Golden Rule stock of atmospheric carbon is uniquely determined, but is not affected by technological change. More generally it is shown analytically within the framework of a reduced model of integrated assessment that the optimal stationary stocks of atmospheric carbon depend on the choice of the discount rate, but are independent of the stock of technological knowledge. These results are then reinforced numerically in a fully specified integrated assessment analysis. [Copyright &y& Elsevier]

Abstract: Flexible-term highway concessions are becoming quite popular around the world as a means of mitigating the traffic risk ultimately allocated to the concessionaire. The most sophisticated mechanism within flexible-term concession approaches is the least present value of the revenues (LPVR). This mechanism consists of awarding the concession to the bidder who offers the least present value of the revenues discounted at a discount rate fixed by the government in the contract. Consequently, the concession will come to an end when the present value of the revenues initially requested has been eventually reached. The aim of this paper is to evaluate the effect that the discount rate established by the government in the bidding terms has on the traffic-risk profile ultimately allocated to the concessionaire. To analyze this effect, a mathematical model is developed in order to obtain the results. I found that the lower the discount rate the larger will be the traffic risk allocated to the concessionaire. Moreover, I found that, if a maximum term is established in the contract, the lower the discount rate, the less skewed towards the downside will be the traffic-risk profile allocated to the concessionaire. [ABSTRACT FROM AUTHOR]

Abstract: At each age an organism produces energy by foraging and allocates this energy among reproduction, survival, growth, and intergenerational transfers. We characterize the optimal set of allocation decisions that maximizes fitness. Time preference (the discount rate) is derived from the marginal rate of substitution between energy obtained at two different times or ages, holding fitness constant. Time preference varies with age in different ways depending on whether an individual is immature or mature, and during the transition between these stages. We conclude that time preference and discount rates are likely to be U-shaped across age. [ABSTRACT FROM AUTHOR]

Abstract: The RAMseS project, under the European Commission''s 6th Framework Program, is dedicated to the construction and test of low-power operations based on photovoltaic power and a multipurpose electric vehicle. In the present study, the life-cycle costs and economical indices for the vehicle during its life span were assessed, compared to those of a standard internal combustion engine vehicle (ICEV). The results indicated that the life-cycle costs for the RAMseS vehicle and the ICEV are the same for a fuel unit price of 1.8€/L. Also, the levelized cost of energy (LCE) for the RAMseS vehicle, was found to be 2.13€/kWh, while RAMseS LCE, without EV taken into account, was shown to be 0.62€/kWh. The RAMseS payback period (PBP) without EV taken into account was calculated to be 9 years if the value of the produced energy becomes at least 0.35€/kWh. Vehicles that use PV systems as their power source, such as RAMseS, will be economically effective for fuel costs higher than 1.8€/L, but considering the environmental benefits that are provided in terms of external costs, they can be considered profitable even at lower fuel costs. [Copyright &y& Elsevier]

Abstract: Basing on the Gordon model perspective and applying multiple criteria decision making (MCDM), this research explores the influential factors and relative weight of dividend, discount rate, and dividend growth rate. The purpose is to establish an investment decision model and provides investors with a reference/selection of stocks most suitable for investing effects to achieve the greatest returns. Taking full consideration of the interrelation effect among variables of the decision model, this paper introduced analytical network process (ANP) and examined leading electronics companies spanning the hottest sectors of lens, solar, and handset by experts. Empirical findings indicated that dividend was affected by industry outlook, earnings, operating cash flow, and dividend payout rate; discount rate was affected by market β and risk-free rate; and dividend growth rate was affected by earnings growth rate and dividend payout growth rate. Also, according to literatures, discount rate possessed a self-effect relationship. Among the eight evaluation criteria, market β was the most important factor influencing investment decisions, followed by dividend growth rate and risk-free rate. In stock evaluations, leadership companies in the solar industry outperformed those in handset and lens, becoming investors’ favorite stock group at the time that this research was conducted. [Copyright &y& Elsevier]

Abstract: To estimate the cost-effectiveness of a potential Helicobacter pylori (HP) vaccine for the Dutch situation, we developed a Markov model. Several HP prevalence scenarios were assessed. Additionally, we assessed the impact of the discount rate for health on the outcomes, as this influence can be profound for vaccines. When applying the current discount rate of 1.5% for health, the expected cost-effectiveness of HP vaccination is estimated below the informal Dutch threshold of €20,000/LYG when the HP prevalence is assumed ≥20% in the Dutch population. In conclusion, we showed that HP vaccination could possibly be a cost-effective intervention. However, this depends to a large extend on the prevalence of HP in the population. Furthermore, we showed the large impact of the discount rate for health on the cost-effectiveness of a HP vaccination program, illustrative for other vaccination programs. [Copyright &y& Elsevier]

Abstract: In debating sustainable development issues such as climate changes and nuclear waste disposal, policymakers usually base their decisions on cost-and-benefit analysis (CBA), which evaluates tradeoffs between costs and benefits spanning over a century. Fundamental to this approach is the choice of an intergenerational discount rate for a society. Observable market rates, however, are mostly available up to 30 years only (e.g. US bonds), which do not necessarily reflect the long-term discount rate for a society to deal with sustainable development. A number of studies have demonstrated that a small change in the discount rate can drastically alter the CBA''s outcome. This paper seeks to unveil the market''s intergenerational discount rate by analyzing a very “long-lived” and inheritable asset—land property. By examining a mix of lease tenures (50, 75, 99, and 999 years) and their transactions, we found that 999-year property commands a significant premium of 5.74% over 99-year property from 1992 through 2006. The premium implies an intergenerational discount rate of 4.31% p.a. on average, which is significantly lower than the intragenerational discount rate. The discount rate so unveiled would contribute to a more informed intergenerational decision analysis, such as evaluating the cost-effectiveness of environmental legislation and assessing very long-term pollution damages in court. The result also has important implications for real estate valuation practices in China, as all land in Mainland China and Hong Kong is leasehold. [Copyright &y& Elsevier]

Abstract: In this paper we use Pindyck''s model [Pindyck, R. S. (2002). Optimal timing problems in environmental economics. Journal of Economic Dynamics and Control, 26, 1677–1697] to show that the discount rate may play an important role in accounting for the income–pollution pattern observed in the real world. Low levels of income involve high values of discount rate, that are obstacles to the adoption of a pollution abatement policy. Only when the discount rate falls, as a consequence of growth, will it be possible to implement measures for emissions reduction. Thus we are able to derive an inverse U-shaped income–pollution pattern, making use of an argument that has not yet been fully considered in the economic debate on this issue. [Copyright &y& Elsevier]

Abstract: Reciprocal altruism involves foregoing an immediate benefit for the sake of a greater long-term reward. It follows that individuals who exhibit a stronger preference for future over immediate rewards should be more disposed to engage in reciprocal altruism – in other words, ‘patient’ people should be more cooperative. The present study tested this prediction by investigating whether participants’ contributions in a public-good game correlated with their ‘discount rate’. The hypothesis was supported: patient people are indeed more cooperative. The paper discusses alternative interpretations of this result, and makes some suggestions for future research. [Copyright &y& Elsevier]

Following the investigation of the link between hotel stock returns and macroeconomic factors in the hospitality finance literature, this study further examines (1) the performance of Taiwanese hotel stocks under two various monetary policy environments, namely expansive and restrictive, and (2) the impact of different monetary stringency on the relationship between hotel stock returns and macro variables in Taiwan. Using changes in the discount rate allows us to effectively measure the monetary policy changes and classify the monetary environment as either restrictive or expansive. Empirical results show that hotel stocks exhibited a higher mean return and reward-to-risk ratio during expansive monetary periods. Moreover, the connection between hotel stock returns and macro variables behaved differently under various monetary conditions. In response to monetary policy developments, the implication for hotel stock investors to reallocate their investment portfolios is provided. [Copyright &y& Elsevier]

Medical imaging centers are an increasingly integral part of the medical services landscape in America. There are many instances in which owners and potential buyers of these enterprises want to ascertain the value of the businesses. There is an industry of professionals who provide expert valuation services for many types of businesses using various recognized alternative methods, some of which are more appropriate than others when valuing an imaging center. The federal government has prescribed parameters for all valuations if they lead to transactions in which fair market value is mandated, and it also expects transactions to adhere to more generalized laws relating to entities that provide services to Medicare patients. Radiologists who own, or who are contemplating ownership of, imaging center operations need to understand the principles of valuation, specifically the factors that are involved in a discounted cash flow determination of fair market value. [Copyright &y& Elsevier]

This article proposes an adaptive action-selection method for a model-free reinforcement learning system, based on the concept of the ‘reliability of internal prediction/estimation’. This concept is realized using an internal variable, called the Reliability Index (RI), which estimates the accuracy of the internal estimator. We define this index for a value function of a temporal difference learning system and substitute it for the temperature parameter of the Boltzmann action-selection rule. Accordingly, the weight of exploratory actions adaptively changes depending on the uncertainty of the prediction. We use this idea for tabular and weighted-sum type value functions. Moreover, we use the RI to adjust the learning coefficient in addition to the temperature parameter, meaning that the reliability becomes a general basis for meta-learning. Numerical experiments were performed to examine the behavior of the proposed method. The RI-based Q-learning system demonstrated its features when the adaptive learning coefficient and large RI-discount rate (which indicate how the RI values of future states are reflected in the RI value of the current state) were introduced. Statistical tests confirmed that the algorithm spent more time exploring in the initial phase of learning, but accelerated learning from the midpoint of learning. It is also shown that the proposed method does not work well with the actor-critic models. The limitations of the proposed method and its relationship to relevant research are discussed. [Copyright &y& Elsevier]

The research and development costs of 68 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per new drug is US$ 403 million (2000 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 11% yields a total pre-approval cost estimate of US$ 802 million (2000 dollars). When compared to the results of an earlier study with a similar methodology, total capitalized costs were shown to have increased at an annual rate of 7.4% above general price inflation. [Copyright &y& Elsevier]

The size of harvests temporarily decreases following stock-recovery programs for overexploited resources. The process of stock recovery is quite uncertain, because of unknown life-history parameters, changes in environmental conditions, and human impact. To project future stock recovery, we considered a size-structured matrix model of a stock-recovery program, in which the minimum body size in the first harvest is increased. We applied some common concepts, including yield per recruitment, spawning per recruitment, and reproductive value, to a size-structured matrix model that incorporated economic discounting. The size-structured model predicted the following characteristics in stock-recovery processes: several years must pass for the harvest to increase, and the time-lag between the inception of the management program and the increase in the catch is caused by intergenerational momentum in demography. We also investigated the effects on the recovery process of temporal environmental fluctuations. We applied our model to a stock-recovery program of the corbiculid Seta clam (Corbicula sandai) in Lake Biwa, Japan. [Copyright &y& Elsevier]

In this study, we propose a measure of “pressure on bank reserves” that, in addition to the target federal funds rate itself, includes the spread between it and the discount rate and the spread between it and the instantaneous market rate of interest on Treasury securities. We find that these spreads help to explain the magnitudes of target funds rate changes in the years when FOMC directives were phrased in terms of desired pressure. Federal Reserve attention to all components of pressure, including the target-short rate spread, can induce stabilizing expectations on the part of the public and public responses that further Fed aims. [Copyright &y& Elsevier]

Hilsa (Tenualosa ilisha), the choicest table fish of Indian subcontinent, provides livelihood for 2.5 million fishermen of Bangladesh and 0.46 million fishermen of West Bengal (WB), India. Hilsa fishery contributes around 1% to the GDP of Bangladesh. Years of over-exploitation of Hilsa fishery through open access has led to an unprecedented decline in Hilsa stock in recent decades. The study aims to investigate the economic efficiency and existing management practices of Hilsa fisheries of WB (India) and Bangladesh. The Gordon-Schafer surplus production model was used to derive a deterministic bio-economic model on Hilsa fishery from the catch-effort-cost-price data of WB (India) and Bangladesh collected between 2002 and 2015. Hilsa populations of two countries have a similar growth rate (r = 0.224). Hilsa catchability coefficient (q) of Bangladesh is 0.000003553, which is about 20 times lower than WB (India) where it is 0.00007147. Fishing effort and Hilsa yield are not significantly associated with each other in WB (India) but in Bangladesh fishing effort has significant positive impact on Hilsa yield. If effort is increased by 1%, the yield in WB (India) may decrease by −1.12% whereas in Bangladesh the same may increase by 8.48%. Results indicate variable habitat conditions and biology of Hilsa are possibly more important for Hilsa yield of Bangladesh compared to WB (India). A 10–20% discount rate is sustainable option for Hilsa fisheries of WB (India) and Bangladesh. The stock reduction analysis demonstrates that WB (India) stock is severely overfished while Bangladesh stock exhibits stability in the overfishing zone. A trans-boundary management of Hilsa fishery is recommended which includes forming a joint scientific council, joint monitoring and facilitating data availability, imposing similar discount rates, ban periods, mesh sizes, and introduction of effort and landing taxes. [ABSTRACT FROM AUTHOR]