Statement from the Editor Regarding "Properties of the Social Discount Rate in a Benthamite Framework with Heterogeneous Degrees of Impatience"

In the original version of the paper "Properties of the Social Discount Rate in a Benthamite Framework with Heterogeneous Degrees of Impatience" by Diego Nocetti (Management Science, Articles in Advance, January 25, 2008), Proposition 2 stated that "First and second order stochastically dominated shifts in the distribution of the individual discount rates reduce the SDR." However, Elyès Jouini and Clotilde Napp pointed out that this is not always the case, noting that "although first and second order stochastically dominated shifts in the distribution of discount rates increase the present value of the project, they are neither necessary nor sufficient to decrease the SDR for all horizons." Consequently, the original paper was replaced by a new version by Nocetti, Jouini, and Napp, which corrects this result by introducing stronger notions of stochastic dominance (maximum likelihood ratio dominance and portfolio dominance) to determine conditions under which the SDR unambiguously increases or decreases given a shift in the distribution of individual discount rates. The online appendix, which includes all formal proofs, was also revised accordingly. The new version of "Properties of the Social Discount Rate in a Benthamite Framework with Heterogeneous Degrees of Impatience" by Diego Nocetti, Elyès Jouini, and Clotilde Napp appears on pp. 1822-1826 in this issue of Management Science.