The problem of definition and calculation of the social discount rate for government financing of social projects at the regional level

Abstract

Relevance. The study’s relevance stems from the need to resolve a fundamental contradiction in spatially distributed state financing to prevent inefficient resource allocation and reduce inequality.

Research Objective. The study seeks to examine specialized theories and present a practical approach to estimating the social discount rate for the effective implementation of state social policy and public financing.

Data and Methods. The study relies on mathematical modeling in combination with comparative and statistical analysis of empirical data, while theoretical and interpretive approaches provide the basis for justifying the chosen calculation model (intertemporal preferences) and critically evaluating the results. This integrated approach was used to calculate and assess the social discount rate for 85 Russian regions.

Results. The study highlights the theoretical and heuristic differences among approaches to estimating the social discount rate, explaining why the intertemporal preference method is most appropriate and distinguishing between stationary and non-stationary economic assessments. It provides an objective interpretation of the Ramsey formula parameters, grounded in primary sources and mathematical constructs. Social discount rate values were calculated for Russian regions, revealing spatial variation and a notable discrepancy between the calculated mean rate (4.26%) and the Central Bank’s key rate (18%).

Conclusions. The proposed methodology for calculating a differentiated social discount rate for each Russian region enables a shift from a uniform approach to a targeted evaluation of social investment effectiveness. In other words, it provides a practical tool to support more informed and equitable budget policy decisions under present economic conditions.