Author/Authors :
Lyon، نويسنده , , Kenneth S، نويسنده ,
Abstract :
I believe there is some confusion among non-economists as to why economists insist on discounting future benefits and costs (net benefits). In discussions with non-economists, I have encountered much resistance to and in some cases even hostility towards discounting the future net benefits of natural resources. I believe that at least some part of this comes from a lack of understanding as to why discounting makes sense. Economists postulate that the individual is the important unit in society in determining better or worse with respect to situations, and an analysis of the individual selecting the most preferred attainable situation indicates that individuals will be wealth maximizers. Extending the analysis to the market, indicates that for certain conditions the market equilibrium will be economically efficient; hence, if society is to contribute efficiently to this situation, they too will discount future net benefits. Two dynamic models are examined to explain and support these conclusions.