Is the discount rate applied to the future benefits of public infrastructure projects too high? Marion Terrill of Australia’s Grattan Institute explains why discount rates should not be frozen where they were in the 1980s.
Economics Explained Host Gene Tunny discusses unfreezing discount rates for infrastructure projects with Marion Terrill, Transport and Cities Program Director at the Grattan Institute, a leading Australian think tank.
Marion is a leading policy analyst with experience that ranges from authoring parts of the 2010 Review of Australia’s Future Tax System to leading the design and development of the MyGov account. She has provided expert analysis and advice on labour market policy for the Australian Government, the Business Council of Australia and at the Australian national university. She joined the Grattan Institute in April 2015 to establish the Transport Program, and has published on investment in transport infrastructure, cost overruns, value capture, congestion, and discount rates.
Here is a link to Marion’s 2018 report on discount rates co-authored with Hugh Batrouney:
Unfreezing discount rates: transport infrastructure for tomorrow
The Resources for the Future Working Paper I quote from in my introductory remarks is Discounting for Public Cost–Benefit Analysis