Nationaløkonomisk tidsskrift,
Nationaløkonomisk Forening

Abstract: The article argues against discounting of utility. A future person’s utility has the same ethical value as an existing person’s utility. Discounting of consumption can be defended if the consumption level is expected to rise independently of the project. The project results in a utility stream that has to be compared to the utility stream that results from the expected alternative use of the production factors. Traditionally this is done by discounting the project’s utility stream with an alternative utility rate of return, but a better practice would be to describe the expected alternative utility stream. To evaluate the relative advantage of this stream and the one resulting from the project, an intertemporal value function is needed. Various value functions are discussed in the article but none of them represents a satisfactory solution to the intertemporal evaluation problem. Therefore further research has to be directed towards the formulation of a satisfactory intertemporal value function as well as towards the problem of making a realistic description of the alternative utility stream.

Keywords: velfærdsøkonomi; projektvurdering

JEL-codes: A10

Language: Danish

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