Working Paper: NBER ID: w11935
Authors: W. Kip Viscusi; Joel Huber
Abstract: 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.
Keywords: hyperbolic discounting; public goods; time preference; environmental quality
JEL Codes: Q20; D90; H40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| hyperbolic discounting (D15) | immediate improvements in environmental quality (Q53) |
| time preference (D15) | environmental policy choices (Q58) |
| age (J14) | time preference (D15) |
| hyperbolic discounting (D15) | valuation of environmental improvements (Q51) |
| intertemporal preferences (D15) | hyperbolic discounting (D15) |