Should we discount future health benefits when considering cost-effectiveness?

Abstract

Geometric discounting has several major drawbacks, and its use is often ethically indefensible. Firstly, using a constant discount rate to factor in uncertainty and the likelihood of project failure is an inaccurate simplification. Secondly, imposing a fixed rate to address infinities in the calculations is not a sound substitute for working out the true counterfactual. Thirdly, the opportunity cost of health improvements is relatively small, and any discounting should factor in the benefits that accrue to others due to improved health. Fourthly, pure time preference, which is a component of the discount rate used to value future benefits less than present ones, is ethically dubious and lacks empirical support. Instead of using a geometric discount rate, it is better to explicitly model the complex issues affecting the value of future benefits. – AI-generated abstract.