Discount Rates

· January 15, 2019

Astronomer Royal Martin Rees gave a Long Now SALT talk last night around the topics in his new book, On The Future, which covers long term threats and opportunities for humanity. One of the approaches I found particularly interesting was being explicit about the discount rates applied when considering different kinds of preventative measures. 

Rees described an ecologist who used a 5% rate, which effectively ignored longer term (>50 year) impacts, but also how our approach for nuclear waste storage uses a very low rate, leading to very long time horizons.

Being explicit about the discount rates used when modelling out scenarios can be helpful for people interested not just in conclusions but the process to arrive at them. This applies as much to the long term of 10 years as to the long term of 10,000.