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arXiv · 2209.06654

The Sign of Risk for Present Value of Future Losses

Brian P. Hanley·Steve Keen
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Abstract

In the ongoing debate over discount rates and climate change, William Nordhaus has championed a higher discount rate to account for risk. Nicholas Stern has championed a lower rate. Here we prove that in the case of a stream of future losses, risk can only be represented by a lower discount rate, never a higher one.

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Brian P. Hanley, Steve Keen. 2022-08-15. The Sign of Risk for Present Value of Future Losses. https://arxiv.org/abs/2209.06654

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