Best Equity Risk Premium

What are the different ways of estimating the equity risk premium, and which one is best? In his March 2025 paper entitled “Equity Risk Premiums (ERP): Determinants, Estimation, and Implications – The 2025 Edition”, Aswath Damodaran updates a comprehensive overview of equity risk premium estimation. He examines why different approaches to estimating the premium disagree and how to choose among them. Using data from multiple countries (but focusing on the U.S.) over long periods through the end of 2024, he concludes that: (more…)