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Discount rates

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Discount Rates

Discount rates are strange (confidence: musings)

(in progress) What time-discounting rate is the correct one, and how would we justify any discount rate? As mentioned above, a 5% discount rate means that we would be happy to sacrifice 39 billion lives in 500 years to save a single life today. However a 0% discount rate means we need to focus almost entirely on future lives to the detriment of present ones, since they vastly outnumber us.

As well as time discounting, we often see people use relationship-wise discounting as well. They care more for family, tribe, country, species. It is a strong enough part of the human psyche that it shapes our moral intuitions strongly, yet its conclusions go against utilitarianism on the surface.

For example, people would not find it morally reprehensible if a parent says that given the choice they would let one thousand people die to save their child, yet this does not maximise utility (assume that nobody would know about the act to avoid factors like 'weakening the child-parent bond' on the utilitarian side).

With future lives, the possibility that they may never occur can justify discounting their utility, for out-group lives there seems to be no obvious justification.

Some flavors of consequentialism try to include this concept [read more about fun flavors of consequentialism]

add notes on public policy, ie Keynes "all dead in the long run" (Yes, we will all be dead in the long run, but hey, our kids won't. Thank god our ancestors did not entirely sacrifice future growth for immediate gain, we would have a far lower standard of living if so) also, notes from Tyler about how conservatives and liberals have their priorities backwards when you consider discounting

Adam Smith: That wisdom which contrived the system of human affections … seems to have judged that the interest of the great society of mankind would be best promoted by directing the principal attention of each individual to that particular portion of it, which was most within the sphere both of his abilities and of his understanding. "Now that's Durkheimian utilitarianism. It's utilitarianism done by somebody who understands human groupishness." haidt

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Last modified 2019-07-12 Fri 09:06. Contact max@maxjmartin.com