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Discounting and the evaluation of lifesaving programs

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The evaluation of lifesaving programs whose benefits extend into the future involves two discounting issues. The intragenerational discounting problem is how to express, in age-j dollars, reductions in an individual's conditional probability of dying at some future age k. Having discounted future lifesaving benefits to the beginning of each individual's life, one is faced with the problem of discounting these benefits to the present—the intergenerational discounting problem. We discuss both problems from the perspectives of cost-benefit and costeffectiveness analyses. These principles are then applied to lifesaving programs that involve a latency period.

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The authors are, respectively, Associate Professor of Economics, Univesity of Maryland and Senior Fellow, Resources for the Future; and Senior Fellow and Vice President, Resources for the Future. We thank the National Science Foundation for their support under grant DIR-8711083.

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Cropper, M.L., Portney, P.R. Discounting and the evaluation of lifesaving programs. Journal of Risk and Uncertainty 3, 369–379 (1990).

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