Discounting for optimal and acceptable technical facilities

Technical facilities should be optimal with respect to benefits and cost. Optimization of technical facilities involving risks for human life and limb require an acceptability criterion and suitable discount rates both for the public and the operator depending on for whom the optimization is carried out. The life quality index is presented and embedded into modern socio-economic concepts. A general risk acceptability criterion is derived. The societal life saving cost ( = implied cost of averting a fatality) to be used in optimization as live saving or compensation cost and the societal willingness-to-pay based on the societal value of a statistical life or on the societal life quality index are developed, the latter for three different mortality regimes. Discount rates γ must be long term averages in view of the time horizon of some 20 to more than 100 years for the facilities of interest and net of inflation and taxes. While the operator may use long term averages from the financial market for his cost-benefit analysis the assessment of interest rates for investments of the public into risk reduction is more difficult. The classical Ramsey model decomposes the real interest rate ( = output growth rate) into the rate of time preference of consumption and the rate of economical growth multiplied by the elasticity of marginal utility of consumption. It is found that the rate of time preference of consumption should be a little large