The work of Christian Gollier presented in this issue of Opinions & Débats raises the difficult question of the balance of efforts to be made by the different generations, whether in favour of the climate, infrastructure, the preservation of natural resources or R&D for example. Are we doing enough for our children’s future? Or, on the contrary, are our efforts in vain, are we exhausting ourselves unnecessarily, for results that will hardly be noticeable? A debate that makes sense in these times of low growth and soaring debts.


Are we doing enough for future generations? This question underlies many of today’s economic issues, such as debt reduction, pension reform, the fight against climate change, the preservation of natural resources, infrastructure investments, or the taxation of savings, for example. Our social responsibility towards future generations is reflected in economic terms by the discount rate, which gives a value to the future relative to the present, and which determines the present/future trade-off of economic agents. If we recognise that a short-termist society uses too high a discount rate, how can we determine the desirable level of this rate? In this article, I summarise the important recent scientific developments on this subject. Given the downward trend in our growth expectations and the strong uncertainties about the long-term evolution of our society, I recommend a risk-free rate ranging from twice the expected growth rate of consumption (for discounting cash flows generated over time horizons of less than 20 years) to 0% (for maturities beyond 100 years). The systematic risk premium should also have a term structure, ranging from 1% in the short term to 3% for the long term.

Christian Gollier

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