Consumer Sovereignty vs. Intergenerational Equity: An Overview of the Stern-Nordhaus Debate

  • Jonathan Orlando Zaddach
Part of the BestMasters book series (BEST)


At first glance, the Ramsey formula delivers a simple framework to the issue of discounting. However, in the context of projects with long time horizons such as the reduction of GHG emissions, the correct parametrization is indeed challenging. Here, supposedly small differences in the formula values have major impacts on policy outcomes. In particular, the value assignment for the pure rate of time preference is very controversial as different values can be motivated by different normative concepts. As mentioned above, this has caused a long and intense discussion in economics between Nicholas Stern and William Nordhaus.


Discount Rate Time Preference Real Interest Rate Climate Protection Intergenerational Equity 
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Copyright information

© Springer Fachmedien Wiesbaden 2016

Authors and Affiliations

  1. 1.Lehrstuhl VolkswirtschaftslehreFAU Universität Erlangen-NürnbergNürnbergGermany

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