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74 U. Chi. L. Rev. 5 (2007)
Caring about the Distant Future: Why It Matters and What It Means

handle is hein.journals/uclr74 and id is 15 raw text is: Caring about the Distant Future: Why It Matters and What It Means Tyler Cowent I. INTRODUCTION A discount rate indicates how to compare future costs and bene- fits to current costs and benefits. Insofar as the discount rate is high, we are counting future costs and benefits for less. A zero discount rate, by definition, means that the future counts for as much as the present. My informal polling over the years suggests that many advocates of greater state spending-especially noneconomists -like the idea of a very low discount rate. Many of these individuals wish that our gov- ernment would devote more resources to education, to infrastructure, and to improving the environment. They see a lower discount rate as supporting these policies. More generally, these individuals believe we are not caring enough about the future. Very low rates of discount therefore serve as a left-wing view in most cases. Similarly, support for market-based discount rates often comes from centrist or more right-wing views. In contrast, I see a stronger concern for the distant future as cut- ting across the current political spectrum. A greater orientation to- ward the future is likely to increase the desirability of policies favoring a market economy, economic growth, and technological innovation- all prerequisites for sustainable economic growth. Furthermore, some of the arguments for these choices may require a deep concern for the more distant future. For instance, strongly positive discount rates usu- ally imply that we should grant considerable importance to the alle- viation of immediate suffering. Market liberalizations, whatever long- run virtues they may have, sometimes increase immediate suffering. Market economies and market reforms look better the greater the weight we place on the relatively distant future. A free society is better today than a corrupt and totalitarian alternative. But one hundred t Professor of Economics, George Mason University, tcowen@gmu.edu. 1 For a left-wing view of discounting, see, for example, Robert Solow, The Economics of Resources or the Resources of Economics, 64 Am Econ Rev 1, 10 (1974) (imposing the require- ment that consumption per head be equalized over time so no generation is favored over an- other). But see wilfred Beckerman, Through Green-Colored Glasses: Environmentalism Recon- sidered at 192-94 (Cato Institute 1996) (offering a market-oriented view that is critical of zero discounting). 5

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