The seminar “Economic expertise and environmental actions” welcomes
Béatrice Cherrier and Liliana Doganova
Discounting
This seminar will focus on discounting, a widespread framework for taking the future into account in economics and in the economy. Retracing both its intellectual history and the effects of its deployment as a valuation device, we will analyzse it as a feature of economic models, as a political technology, and as a way to bring the future into existence – in particular the future of the climate and the environment.
Béatrice Cherrier (CREST)
How the “Ramsey formula” came to define time discounting in economics (1950-2000)
Based on an article written with Pedro Garcia Duarte, the talk investigates the emergence and stabilization of the Ramsey formula as a major framework for discounting in economics. Despite widespread belief, the formula did not originate in Frank Ramsey’s 1928 paper. We track how policy and academic economists increasingly grappled with discounting in public investment decisions in the 1940s-1960s, with a few of them endorsing the ongoing work in optimal growth theory as the proper framework for deriving rates. This framework was further discussed in the 1970s and 1980s as the energy crisis made discounting for the distant future a salient issue. We show that it was only in the 1990s, as discounting in climate models was discussed in the context of IPCC reporting, that the Ramsey formula stabilized as a discounting framework. In the process, it transformed from an optimality condition to a definition, encompassing the debate between “descriptive” and “prescriptive” approaches to discounting. Our research highlights the pivotal role of Kenneth Arrow in spreading the Ramsey formula, as well as the persistent tension between theoretical consistency, ethical choices and tractability motives in deciding whether and how to discount in economic models.
Liliana Doganova (CSI-i3, Mines Paris – PSL)
Discounting the Future: The Ascendancy of a Political Technology
The climate and ecological crisis prompts a question: have we lost our capacity to act on the future? In this talk, I propose to address this issue through the devices that compose our relationship with the future. I focus on a device that recently came under the spotlights in debates on climate change but has been entrenched in economic and policy practices for decades. This device is discounting: a technique that values all things through the flows of costs and benefits or revenues that they are likely to generate in the future, with these future flows being literally dis-counted as they are translated in the present. Building on my recently published book Discounting the Future: The Ascendancy of a Political Technology (Zone Books, 2024), I outline three troubles with discounting. First, is the future worth less than the present, and should it be counted or discounted? Second, does value stem from the future, and should looking to the future guide acting in the present? Third, is discounting a general form of action, which can encompass all kinds of entities and issues? I discuss these three troubles through examples drawn from the historical sociology of discounting developed in the book as well as more recent examples. Analyzing discounting as a political technology leads to exploring the links between temporality and valuation. I conclude that shifting focus from the problem of (not) knowing the future to the problem of (de)valuing the future enables us to examine afresh what acting on the future means and entails.
Béatrice Cherrier is a historian of economics, a CNRS Research Director and professor at CREST (Centre de recherche en économie et statistique – CNRS, ENSAE Paris, École polytechnique). Her research focuses on the history of applied economics since the Second World War. She is interested in various aspects of “applied work” in economics: the history of specific fields (public economics, urban economics, environmental economics, macroeconomics); the practices of economists outside the academic world, in particular in central banks and international institutions; the influence of computerisation on economists’ models, tools and practices, in particular their tractability constraints; finally, she is working on the consequences of the growing prestige of applied economics on the scientific recognition given to women economists since the 1970s.
Liliana Doganova is Associate Professor at Mines Paris – PSL and researcher at CSI (Centre de sociologie de l’innovation, I3 UMR 9217). At the intersection of economic sociology and Science and Technology Studies, her work has focused on business models, the valorization of public research and markets for bio- and clean-technologies. She has published in journals such as Economy and Society, the Journal of Cultural Economy, Research Policy, Science as Culture, and Science and Public Policy. She is the author of Valoriser la science (2012) and co-author of Capitalization: A Cultural Guide (2017). Her latest book, Discounting the Future: The Ascendancy of a Political Technology (2024, Zone Books), explores the links between valuation and temporality through a historical sociology of the technique of discounting the future. Her new research projects focus on forests valuations (research conducted as part of the Valuethreads project, coordinated by Kristin Asdal at the University of Oslo) and on drug prices (research conducted with Vololona Rabeharisoa as part of the SPIN project). Liliana is co-director, together with Clément Marquet, of the program in Public Affairs and Innovation at Ecole des Mines de Paris. She is a member of the editorial boards of Valuation Studies and Journal of Cultural Economy.
Information and registration
Date: Friday January 10, 2025, 11 am-1pm
Venue: École des Mines, 60 boulevard Saint Michel, 75006 Paris. Salle Chevalier
The session will also be streamed by videoconference. The link will be sent upon registration just before the seminar.
The seminar is open to all. Please register here to participate in this session
Contact: Béatrice Cointe, Kewan Mertens or Alexandre Violle
Find out more about the program
Photo credit: Béatrice Cherrier, CNRS.
Photo credit: Liliana Doganova, CSI-i3, Mines Paris – PSL