A6.16 The recommended discount rate for risk to health and life values is 1.5%. This is because the 'wealth effect', or real per capita consumption growth element of the discount rate, is excluded. As set out in Annex 2, health and life effects are expressed using welfare or utility values, such as Quality Adjusted Life Years (QALYs), as opposed to monetary values. The diminishing marginal utility associated with higher incomes does not apply as the welfare or utility associated with additional years of life will not decline as real incomes rise.
A6.17 The standard UK discount rate may not be appropriate for appraisal of Official Development Assistance (ODA) expenditure. For example, long term growth rates, the probability of catastrophic risk and the macro-economic effects associated with expenditure may differ. An appropriate estimate of the STPR for the recipient country should be used. Government departments should contact Department for International Development if they require further information.