THE PRESENT VALUE OF THE PAST

Abstract

One of the seminal ideas in economics is that future events have a present value (either as costs or benefits), and that this value is calculable (through a private or social rate of interest). Having acknowledged this pivotal role, I will argue that present valuation is nevertheless not of much help in some problems, and can lead to erroneous results in others. To understand and to resolve certain problems, it is as important to have a method for evaluating the past as the future. Actions taken in the present can differentially affect past valuations (either by the actor or by those whom the action affects), and these valuations can influence both actual and preferred choices. The main purposes of this paper are: to elaborate the heuristics of evaluating the past; to formulate an economic model in which valuation of the past is central, and is subject to influence by present choices; and to illustrate the model by applying it to several problems which it can handle, but which the standard approach cannot.

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Document Details

Document Type
Technical Report
Publication Date
Apr 01, 1969
Accession Number
AD0686322

Entities

People

  • Charles Wolf, Jr

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  • RAND Corporation

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  • United States

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