XML FeedsHyperbolic Discounting of Public Goods
By CostBenefit on Jan 27, 2006 | In General, Academic Study/Journal Article, Research Institute NGO NonProfit, Contingent Valuation, Surveys,.., Environmental Economics / Ecological Economics | Send feedback »
Link: http://papers.nber.org/papers/w11935
This article examines revealed rates of time preference for public goods, using environmental quality as the case study. A nationally representative panel-based sample of 2,914 respondents considered a series of 5 conjoint policy choices, yielding 14,570 decisions. Both the conditional fixed effect logit estimates of the random utility model and mixed logit estimates implied that the rate of time preference is very high for immediate improvements and drops off substantially thereafter, which is inconsistent with exponential discounting but consistent with hyperbolic discounting. The implied marginal rate of time preference declines and then rises. Estimates of the quasi-hyperbolic discounting parameter range from 0.48 to 0.61. People who are older are especially likely to have a high disutility from delays in improving water quality.
by W. Kip Viscusi and Joel Huber
National Bureau of Economic Research (NBER) www.nber.org
Working Paper No. 11935; January 2006
http://papers.nber.org/papers/w11935
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