This is a guest post by Rachel
Whether or not we should do something about climate change is often evaluated in terms of costs and benefits. If the benefits of doing something outweigh the harms, then this would give us a reason to do something about it. If the costs of mitigation are greater than the benefits, then this leads people to argue that we should do nothing or little about the problem. But disagreements arise because we can’t agree on how much these costs and benefits are. Most of the harms will be inflicted on future generations and some people think that the way in which these harms are currently being calculated is inaccurate at best, unethical at worst.
One assumption which is often made in these cost-benefit analyses is that future harms and benefits are worth less than harms and benefits which occur today. Philosophers call this discounting the future and they seem to disagree with economists on the merits of discounting in this way. They argue that whether something is good or bad has nothing to do with the time in which it happened. Harms are just as bad regardless of whether we endure them today or the people living 100 years from now endure them.
There are however some arguments in favour of a certain degree of discounting which seem reasonable to me. I’ve just read quite an interesting paper called On discount rates in the cost-benefit analysis of climate change. The author makes the case for the pricing and therefore discounting of commodities rather than harms and benefits directly. If we want to compare the prices of things at different times then we need to adjust them in ways that make such comparisons accurate as commodities change in price over time. So this seems fair enough to me.
He also argues for what is known as decreasing marginal value. This is when stuff becomes less important to us as we get more of it. For instance, our fifth computer is going to be less beneficial to us than our first or second. If people of the future have more stuff, then the benefits of additional stuff will be of less value to them than to people who have less stuff. I’ve heard other people argue something similar: future generations will be wealthier than us and so this is justification for discounting the costs and benefits we leave to them. The philosopher Derek Parfit disagrees with this and says “These two arguments do not justify a social discount rate. The ground for discounting these future benefits is not that they lie further in the future, but that they will go to people who are better off“. ( source: http://faculty.smu.edu/jkazez/parfitsocialdiscountrate.pdf)
I think what Derek Parfit is saying is that by discounting on the basis of time, we are not being true to our reasons for discounting, which are that people are wealthier and not that they live in the future. Luc Van Liedekerke says “A social discount rate is only justified when it exactly traces the growth process in future welfare, if not, the discount rate leads us astray“.
Another argument made in favour of social discounting is that future risk is uncertain. Derek Parfit calls this the argument from probability. He says that “Predictions about the further future are not less likely to be true at some rate of n percent per year. When applied to the further future, many predictions are indeed more likely to be true”. I think what he’s saying is that when we justify an outcome because it is uncertain, our reason is not because it occurs in the future, but because it is uncertain.
It took me a while to understand this so I’ll elaborate with the example that Parfit gives. Suppose some radiation is going to escape from somewhere and potentially cause a billion deaths in 400 years. If we discount those deaths at 5% per year, then a billion deaths in 400 years is worth less morally than one death next year. This is indefensible. However, if we use the argument from probability, we can say that it’s possible that over the next few hundred years, humans will develop the technology to resolve this problem and so the billion deaths becomes less likely. It’s therefore not a case of the interests of a billion people 400 years hence counting for less, but that the probability of their deaths is a billion times less likely to occur. Parfit says that “It is therefore a mistake to discount for times rather than probability“. This explained well by Liedekerke:
We ought not to discount over time but over probabilities. When we discount over time we misrepresent our reasons for discounting, suggesting that we attach lesser importance to what happens in the future while in fact we attach lesser importance to what is uncertain. Now one could argue that the further you go in time, the more uncertain outcomes become, so time discounting would in fact amount to probability discounting. But not only would this give a misrepresentation of our real views, but it is also very unlikely that probability discounting is in all circumstances the same as time discounting; and if it is not the same, time discounting will point to wrong conclusions.
I accept that maybe some discounting is useful, discounting commodities for instance, but it seems to me that some of the other things we discount on the basis of time, are unjustifiable and at odds with our reasons for discounting them in the first place which suggests to me that our conclusions are probably wrong.