By Rahul Ravi
Publication Date: 2026-05-11 16:02:00
Millions of people around the world now use AI companions – for friendship, emotional support, psychological counseling and romantic interactions. According to a study from the USA, this includes 72 percent of young people.
Meanwhile, human-caused climate change has already resulted in widespread impacts and increasing risks, some of which are irreversible. Nevertheless, emissions remain high.
As a finance professor, I see these phenomena as different expressions of the same underlying tendency: We apply too high a discount rate going forward.
The idea of a discount rate is simple. A dollar today is worth more than a dollar tomorrow. The discount rate tells us by how much. If you set this value too high, you systematically underestimate what lies ahead. If you set the value too low, you will invest too much in distant outcomes.
In many areas of life we value this value too highly. Behavioral economist David Laibson has shown that people place a disproportionate amount of value on immediate rewards, even when…
