Discounting of Nonmonetary Effects

Emmett B. Keeler, Shan Cretin

ResearchPublished 1982

Cost-effectiveness analysts generally assume that preferences over time are such that streams of monetary and nonmonetary program effects can be reduced to one discounted sum of monetary costs and another of effects. It is known that if the nonmonetary effects can be cashed out in a way that does not vary with time, then the rates of discount for monetary and nonmonetary effects have to be equal. This Note presents a more compelling argument for the equality of those rates when hard-to-monetize benefits such as life-saving are involved. The Note shows that if the ability to produce the nonmonetary effect does not diminish too quickly over time, failure to discount benefits implies that programs are always improved by delay. In general, discounting benefits and costs at different rates can lead to peculiar results.

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  • Copyright: RAND Corporation
  • Availability: Available
  • Year: 1982
  • Print Format: Paperback
  • Paperback Pages: 24
  • Paperback Price: $20.00
  • Document Number: N-1875-HHS

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RAND Style Manual
Keeler, Emmett B. and Shan Cretin, Discounting of Nonmonetary Effects, RAND Corporation, N-1875-HHS, 1982. As of September 12, 2024: https://www.rand.org/pubs/notes/N1875.html
Chicago Manual of Style
Keeler, Emmett B. and Shan Cretin, Discounting of Nonmonetary Effects. Santa Monica, CA: RAND Corporation, 1982. https://www.rand.org/pubs/notes/N1875.html. Also available in print form.
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