Social interest rate for public sector appraisal in the united kingdom, the united states and canada

Abstract

The social interest rate (SIR) is an important parameter in project appraisal in public sector economics. In this article a SIR is derived for the United Kingdom, the United States and Canada on the basis of an individualistic and two-period consumption utility function. The model yields an operational formula the component parameters of which are: a mortality based pure time discount rate; the growth rate of per capita consumption, in real terms; and the elasticity of marginal utility of consumption. The final results are: the United Kingdom 2.6%, the United States 5.3% and Canada 5.4%. © 1987 Taylor & Francis Group, LLC.