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Jens 'n' Frens |
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My brother offers a critique of a dissertation over at Volokh, and I have some responses I want to make. First, I find it terribly disappointing that Cowen doesn't seem, on point 1, to actually try to estimate the time preference for foundation spending at all. He seems to suggest that it's the same as the return rate on T-bills, but I have no idea why this would be. As for your comment on point 2, Steve, I believe Cowen is right when he says that historically T-bills have yielded less than 1% in real terms; real growth has surely exceeded that. I'm willing to argue backward, that the silly result (infinite present value) means that this is the wrong discount rate to use for this problem (this may be an issue of marginal versus average return), but it's then worth noting, as Cowen implicitly does, that any argument that they shouldn't spend spend spend, assuming that time preference is equal to the T-bill rate, requires a discount rate higher than that. |
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