“Just give me a number!” Practical values for the social discount rate

A major reason the quality of cost‐benefit analysis (CBA) varies widely is inconsistent use of the social discount rate (SDR). This article offers guidance about the choice of the SDR. Namely, we recommend the following procedures: If the project is intragenerational (does not have effects beyond 50 years) and there is no crowding out of private investment, then discount all flows at 3.5 percent; if the project is intragenerational and there is some crowding out of investment, then weight investment flows by the shadow price of capital of 1.1 and then discount at 3.5 percent; if the project is intergenerational and there is no crowding out of investment, then use a time‐declining scale of discount rates; if the project is intergenerational and investment is crowded out, then convert investment flows during the first 50 years to consumption equivalents using a shadow price of 1.1, and then discount all of these flows at 3.5 percent, and discount all flows after the 50th year using time‐declining rates. We then compare current discounting practices of U.S. federal agencies with our estimates. Consistent use of the recommended rates would eliminate arbitrary choices of discount rates and would lead to better public sector decision‐making. © 2004 by the Association for Public Policy Analysis and Management.     

Building the firm's political (lobbying) strategy

• In this paper, we present a framework for building a firm's issue‐specific lobbying strategy. We argue that there are five critical elements of a lobbying strategy and that the major choices concerning political lobbying strategy relate to these elements. The five elements, and the primary strategic choices concerning these elements are: (1) the choice of the level and type of inclusiveness of the strategy; (2) the choice of the form, or forms, of argument to be used in persuading relevant target constituencies; (3) the choice of jurisdictional venue to be addressed; (4) the choice of organizational target that will be engaged and (5) the choice of delivery mode—that is, whether political strategies should be implemented directly by firm managers or outsourced to professional suppliers of these services. We explain these elements in detail. However, in order to engage in a lobbying strategy on a specific issue, the firm must first be able to identify relevant government actions and understand their profitability impact. We show how the strategic logic can be generated by an augmented version of Porter's ‘five forces’ (5F) model (Porter, 1980 ) that explicitly recognizes the role of government—‘six forces’ analysis.

Copyright © 2005 John Wiley & Sons, Ltd.