Social discount rates for six major countries

Evans, David; Sezer, Haluk

doi:10.1080/135048504200028007

Cited by 73 publications

(46 citation statements)

References 3 publications

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“…9 When RRA = 0, of course,ŵ = w CE ; this is the actuarially fair insurance baseline otherwise interpreted as the policy-based alternative. The Anthoff et al (2009) range straddles (with a larger variance) the mean of 1.49 estimated by Evans and Sezer (2004) and (2005) using a different approach that focused on the behaviors of actual decisionmakers. Panel a in Fig.…”

Section: The Value Of Insurance In Climate Adaptationmentioning

confidence: 99%

On the economics of coastal adaptation solutions in an uncertain world

2010

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The economics of adaptation to climate change relies heavily on comparisons of the benefits and costs of adaptation options that can range from changes in policy to implementing specific projects. Since these benefits are derived from damages avoided by any such adaptation, they are critically dependent on the specification of a baseline. The current exercise paper reinforces this point in an environment that superimposes stochastic coastal storm events on two alternative sea level rise scenarios from two different baselines: one assumes perfect economic efficiency of the sort that could be supported by the availability of actuarially fair insurance and a second in which fundamental market imperfections significantly impair society's ability to spread risk. We show that the value of adaptation can be expressed in terms of differences in expected outcomes damages only if the effected community has access to efficient risk-spreading mechanisms or reflects risk neutrality in its decision-making structure. Otherwise, the appropriate metric for measuring the benefits of adaptation must be derived from certainty equivalents. In these cases, increases in decision-makers' aversion to risk increase the economic value of adaptations that reduce expected damages and diminish the variance of

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Section: The Value Of Insurance In Climate Adaptationmentioning

confidence: 99%

On the economics of coastal adaptation solutions in an uncertain world

2010

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“…The Ramsey equation has frequently been applied to gain estimates of the social discount rate for public project evaluation (e.g. [23][24][25][26][27][28][29][30]). In the next sections, we present the results of our study for the single components of this formula.…”

Section: Deriving the Srtp By Estimating The Ramsey Equationmentioning

confidence: 99%

Towards a social discount rate for the economic evaluation of health technologies in Germany: an exploratory analysis

Schad

John

2010

Eur J Health Econ

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Over the last decades, methods for the economic evaluation of health care technologies were increasingly used to inform reimbursement decisions. For a short time, the German Statutory Health Insurance makes use of these methods to support reimbursement decisions on patented drugs. In this context, the discounting procedure emerges as a critical component of these methods, as discount rates can strongly affect the resulting incremental cost-effectiveness ratios. The aim of this paper is to identify the appropriate value of a social discount rate to be used by the German Statutory Health Insurance for the economic evaluation of health technologies. On theoretical grounds, we build on the widespread view of contemporary economists that the social rate of time preference (SRTP) is the adequate social discount rate. For quantifying the SRTP, we first apply the market behaviour approach, which assumes that the SRTP is reflected in observable market interest rates. As a second approach, we derive the SRTP from optimal growth theory by using the Ramsey equation. A major part of the paper is devoted to specify the parameters of this equation. Depending on various assumptions, our empirical findings result in the range of 1.75-4.2% for the SRTP. A reasonable base case discount rate for Germany, thus, would be about 3%. Furthermore, we deal with the much debated question whether a common discount rate for costs and health benefits or a lower rate for health should be applied in health economic evaluations. In the German social health insurance system, no exogenously fixed budget constraint does exist. When evaluating a new health technology, the health care decision maker is obliged to conduct an economic evaluation in order to examine whether there is an economically appropriate relation between the value of the health gains and the additional costs which are given by the value of the consumption losses due to the additional health care expenditures. Therefore, a discount rate lower than the SRTP for consumption should be applied if an increase in the consumption value of health is expected. However, given the limited empirical evidence on the relationship between consumption and the value of health, it is hardly possible to make reliable forecasts of this value. Regarding the practice of the German evaluation authority, it is not recommended to use differential discounting in the base case. Instead, the issue of differential discounting should be addressed in sensitivity analyses. Reducing the discount rate for health compared to the rate for costs by a figure in the range between near 0% and 3% may be considered to be appropriate for Germany.

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“…In recent studies (Evans and Sezer, 2004;Evans, 2004;Percoco, 2006), in the absence of strong empirical evidence, a 1-1.5% rate of pure time preference was suggested for some OECD countries in order to calculate the stpr.…”

Section: Introductionmentioning

confidence: 99%

“…In this vein, the traditional Ramsey formula (Ramsey, 1928) captures both the pure time preference and other, more economicallyoriented elements such as the expected growth rate of the economy and the risk associated with the relative uncertainty over future outcomes. According to Evans and Sezer (2004), the Ramsey formula for the calculation of the social time preference rate (stpr) can be approximated by the following simple expression:…”

Section: Introductionmentioning

confidence: 99%