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Discounting the future: influence of the economic model
1Epidemiology, University of Wales College of Medicine, Cardiff.
Objective:
To consider the effect of the economic discount rate on health care policy and the rationale for discounting the collective future of society generally.
Design:
A review of the concept of discounting the future vis à vis the present from the points of view of individuals (who pass on) and of societies (that continue) and reconsideration of the application of discounting to typical public health scenarios.
Setting:
A public health service, within a basically stable society, which can reasonably anticipate a nearly certain future.
Results:
Discounting necessarily overvalues the "here and now" compared with the future. While applications of discount rates, typical of those employed in health economic studies in recent years, may seem rational in health care programmes directed at middle aged employed people, they do not for the young and the elderly, important recipients of health care. The consequences of discounting do not accord with the aims and objectives of public health.
Conclusions:
The "time preferences" of transient individuals within a stable society do not provide a rational basis for time preference of a stable society collectively. Discounting inevitably encourages "short termism" and hence biases public policy decision making. The neoclassical theory that gave rise to the concept of discounting requires revision.