What rate is commonly used for discounting in economic evaluations?

• A. About 5% per year
• B. About 0% per year
• C. About 10% per year
• D. About 3% per year

Answer: (D)

Discounting future costs and benefits to present value uses a rate that captures time preference and the opportunity cost of capital. In economic evaluations, about 3% per year is commonly used as the default discount rate. This mid-range rate provides a balanced approach: it acknowledges that benefits or costs happening in the future are worth less today, without undervaluing long-term effects or over-penalizing them. A zero discount rate would treat present and future as equally valuable, while a higher rate like 5% or 10% would discount long-term benefits more heavily, potentially biasing against interventions with outcomes that unfold far in the future. Guidelines in many health economic contexts adopt around 3% as the standard default, often accompanied by sensitivity analyses to test how results change with different rates.