An excerpt from a work in progress (by me) on the appropriate choice of discount rate:
Looking to physics, Einstein’s theory of relativity suggests there is no fact of the matter as to what time it is. Any measurement of time (when is “now”?) is relative to the perspective of an observer, and to the velocity of that observer, relative to the speed of light. In other words, if you are traveling very fast, you are moving into the future at an especially rapid rate. Yet it seems odd, to say the least, to discount the well-being of people as their velocity increases. Should we pay less attention to the safety of our spacecraft, and thus the welfare of our astronauts, the faster those vehicles go? If for instance we sent off a spacecraft at near the velocity of light, the astronauts would return to earth, hardly aged, many millions of years hence. Should we – because of positive discounting — not give them enough fuel to make a safe landing? And if you decline to condemn them to death, how are they different from other “residents” in the distant future?
I am told that L. Ron Hubbard considered the related question of what a currency should be worth in a very fast spaceship. What about the term structure of interest rates? Uncovered interest parity? To be fully general, must we add a "speed" term in addition to the usual "risk premium"? Comments are open.