How to save 40% on benefits
13/09/2012 § 9 Comments
I can save MSD 40% of those costs. I won’t even charge them for the advice — nope, this is a public service. Here is a chart of the results:
MSD’s costs are the total area shown. The costs of my plan are shown in green. The savings to MSD are in blue.
Here is my proposal:
Use Treasury’s standard discount rate.
Yeah, simple, I know, but sometimes the simplest ideas are the best.
See, MSD and Treasury got together and gave the consultants who wrote the report an extra-special, one-time-only set of discount rates. A colleague alerted me to this — I’ll let the person claim credit in the comments. There it is, Table 5.3 (notice the use of the technique, hiding it in plain sight). I’ll put the rates below, alongside the standard Treasury rates that most of us have to use when evaluating research spending, social spending, roads, dams, etc.
Simple, yet effective.