Gamma discounting

By incorporating the probability distribution directly into the analysis, t his paper proposes a new theoretical approach to resolving the perennial di lemma of being uncertain about what discount rate to use in cost-benefit an alysis. A numerical example is constructed from the results of a survey bas ed on the opinions of 2,160 economists. The main finding is that even if ev ery individual believes in a constant discount rate, the wide spread of opi nion on what it should be makes the effective social discount rate decline significantly over time. Implications and ramifications of this proposed "g amma-discounting" approach are discussed.