ABSTRACT
In an ideal Fisherian world in which the market rate of interest is equal both to society’s rate of time preference and to the current rate of return on private investment, the ranking of alternative investment streams is accomplished simply by comparing their present values when discounted by the market rate of interest. Problems arise only when the rate of return on private investment, ρ, exceeds r, the common rate of time preference. There are many reasons why this should be so, 1 and we shall assume this to be the case from now on.
