Evaluation of a social discount rate for the Russian Federation under social rate of time preference approach and carrying out comparisons for different countries

Abstract

Developing methods of social discount rate evaluation is crucial for making analysis of programs and projects implemented in the public sector of economy. Among other different approaches to rate evaluation this article outlines and describes the method of social rate of time preferences . SRTP, that allows to estimate the social discount rate for different countries and compare the obtained results. It also presents the method of social opportunity cost of capital . SOC. According to SRTP the social discount rate is regarded as a rate at which the society is ready to refuse to consume at present for the sake of consuming in the future. In other words, this rate reflects the future social consumption preference of the society today. The SOC approach is regarded as an alternative method to the social rate of time preferences and is applied when making decisions concerning investments that can be made not exclusively in the public sector, but in the private sector as well. This research estimates the social rate of time preference SRTP for Russia and presents comparable data about different countries. The author also makes a social rate forecast for 2007-2010 time period in Russia that contains a range of possible meanings this rate may have in the lapse of time.