STRUCTURING LONG-TERM DECISIONS

Abstract

The public is demanding more democratic decision making processes that take into account their opinions and views. In order to make large societal decision making processes inclusive, it is necessary to find a way of communicating the issues involved in a decision without becoming swamped with the technical aspects. Many of the societal decisions that have to be made, e.g., about the greenhouse effect and radiation, have very long-term impacts, which make them even more complex. One of the more controversial issues in evaluating long-term impacts is the choice of discount rate, or indeed whether discounting is appropriate. When the decision is societal and there are many stakeholders, the debate about the discount rate can become very heated. Using exponential discounting focuses attention on the discount rate and does not help stakeholders explore their opinions and beliefs. Atherton and French (1998) suggested an alternative methodology based upon a time-era structuring of attributes. By dividing time into distinct eras and weighting these rather than applying one discount rate over the whole lifetime of the project, a seemingly more transparent way of dealing with time preferences was developed. To further investigate the acceptability of the methodology to a broad range of people, an interactive World Wide Web page was set up. The page was not context specific and talked about an undefined project, not a particular decision situation. The subjects were asked to define the time eras themselves and to weight them. They were then asked to indicate what had motivated their weights and finally they were asked how their weights would change if the issues changed. Most subjects found the ideas easy to comprehend and commented positively about the experiment. Seventy-five per cent of the subjects divided time into increasing intervals in line with the suggestions made in Atherton and French (1998). Sixty-five per cent of them had decreasing time era weights, but their weights decreased more slowly than those prescribed by constant discounting. This paper describes the results of the experiment, indicating the implications they may have for societal decision making.