Rationale for discounting I am interested in understanding the rationale behind discounting in the context of government policy appraisal. 

As far as I understand it, there are three main components to the discount values normally used:


Estimate of catastrophic risk.
GDP growth.
Time preference value of money. 


Adjustment of future costs/revenues to the first two of these make sense to me, but the third seems to include a "normative judgement" that I want to check I understand. 

By adjusting for the time preference value of money in policy appraisal we are explicitly saying that we value the utility of present people more than the utility of future people? Not just because an event may lead to the destruction of society (1), or because the economy will grow and hence costs/benefits will be smaller in the future (2), but because future benefits mean less to current people now. 

Any confirmation or challenge to my understanding would be appreciated.
As Kitsune rightly points out the usual reason for the inclusion of the time preferences for money into the discount formula (or Ramsey fomula) is that we observe this kind of behaviour in people. Given that many economists take a positive approach towards the study of economics, that is a logical stance.

That being said the last word is not spoken on this, and discounting and its use in benefit cost analyses for especially long-term policies is an active area of research. The Stern review on the economics of climate change sparked intense debate on whether we should include a pure rate of time preference and if so, what its size should be. On the one had you had economists like Stern who argued for a very small rate (0.01 % if memory serves), only to account for catastrophic risk, on the other hand there were economists like Nordhaus who argued for a rate close to 3%, based on observed choices by people in real life and the interest rates. Wikepedia covers the debate here

Martin Weitzman did a study among 2160 economists what the real discount rate should be  for climate change (that is pure rate of time preference plus discounting because of GDP growth) called Gamma discounting and published in the AER. He found a range from -3 to 27%, which may give you an idea of the disagreement among economists on the issue of discounting. 

Drupp, Freeman, Groom and Nesje did a more detailed follow-up in 2015, called discounting disentangled. Their range for the full discount rate is lower, from 0 to 10%, and they also asked explicitly what the pure rate of time preference should be. The mean recommended value for the latter by their 200 surveyed experts was 1.10%, but even that rate had a range from 0 to 8%.

Interestingly, the person who first came up with the Ramsey formula, Frank Ramsey, in a mathematical theory of saving, argued for a rate of time preference for societies of 0, calling a positive rate "ethically indefensible", although he does use a positive rate later on in the paper.