Valuing the future... you're doing it wrong

摘要

SHORT-TERM thinking is a criticism often levelled at corporations and banks by anti-capitalist protesters, and they may well be right. A lack of concern for the future is built mathematically into economic theory, and this carries through to the behaviour of companies and governments. But a different way of putting a financial value on the future is changing that. Economists assume that society will gradually get richer, typically by about 3 per cent a year - occasional crashes notwithstanding. To account for this, they "discount" future events: models might value a resource at $100 if it's immediately available, but only $97 if it is only available in a year's time. The problem, says economist John Geanakoplos of Yale University, is that models shave off the same percentage every year. As a result, the value of assets decreases exponentially, and is effectively zero within decades or centuries. So economics effectively ignores far-future events, even if they are world-shattering.