Cover: The discount rate for defense decisionmaking: some new considerations

The discount rate for defense decisionmaking: some new considerations

by Robert Shishko

Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback23 pages $20.00 $16.00 20% Web Discount

Many economists believe government projects that would be rejected by the private sector are funded by the government because an inappropriate discount rate is used. In this paper, the author examines in theoretical terms the choice of the discount rate for the Department of Defense. The author recommends explicitly incorporating major uncertainties using the state preference approach. The author also finds that the selection of the discount procedure is probably more important for the acceptance or rejection of a given project than is the choice of the discount rate per se. Strategic considerations that arise for military investments are also discussed.

This report is part of the RAND Corporation Paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.