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Preferences in the Future

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Author Info
J.K. Horowitz ()

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Abstract

Environmental economics has been much occupied with “the discount rate,” which is the value of future costs and benefits relative to present costsor benefits. But at least as important is the question of whatshould be discounted, that is, what the value of those future environmentalbenefits is to future generations. This paper analyzes the role for futurepreferences and discusses the state of knowledge. I argue that theappropriate discount rate is the market one, and that the real problemis determining future willingness-to-pay. This approach makes clearerthe connection between discounting and the valuation debate. This paper focuses on two features that have been prominent in that debate:existence value and reference dependence. I argue that thereis a vital connection between the two constructs and that this link yieldsimportant implications for future willingness-to-pay. Copyright Kluwer Academic Publishers 2002

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Publisher Info
Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 21 (2002)
Issue (Month): 3 (March)
Pages: 241-258
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:enreec:v:21:y:2002:i:3:p:241-258

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Web page: http://www.springerlink.com/link.asp?id=100263

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Related research
Keywords: discount rate; environmental valuation; existence value; future preferences; paternalistic altruism; reference dependence;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Flores, Nicholas E. & Carson, Richard T., 1997. "The Relationship between the Income Elasticities of Demand and Willingness to Pay," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 287-295, July. [Downloadable!] (restricted)
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  2. Brekke, Kjell Arne, 1997. "The numeraire matters in cost-benefit analysis," Journal of Public Economics, Elsevier, vol. 64(1), pages 117-123, April. [Downloadable!] (restricted)
  3. Matthew Rabin, 1998. "Psychology and Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 11-46, March. [Downloadable!] (restricted)
  4. Bowman, David & Minehart, Deborah & Rabin, Matthew, 1999. "Loss aversion in a consumption-savings model," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 155-178, February. [Downloadable!] (restricted)
  5. Kopp, Raymond & Portney, Paul, 1997. "Mock Referenda for Intergenerational Decisionmaking," Discussion Papers dp-97-48, Resources For the Future. [Downloadable!]
  6. David F. Bradford, 1997. "On the Uses of Benefit-Cost Reasoning in Choosing Policy Toward Global Climate Change," NBER Working Papers 5920, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-84, September. [Downloadable!] (restricted)
  8. Rollins, Kimberly & Lyke, Audrey, 1998. "The Case for Diminishing Marginal Existence Values," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 324-344, November. [Downloadable!] (restricted)
  9. Andrew Caplin & John Leahy, 2001. "Psychological Expected Utility Theory And Anticipatory Feelings," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 55-79, February. [Downloadable!] (restricted)
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  10. Schelling, Thomas C, 1992. "Some Economics of Global Warming," American Economic Review, American Economic Association, vol. 82(1), pages 1-14, March.
  11. Bengt Kristrom & Pere Riera, 1996. "Is the income elasticity of environmental improvements less than one?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 7(1), pages 45-55, January. [Downloadable!] (restricted)
  12. Laitner, John & Ohlsson, Henry, 2001. "Bequest motives: a comparison of Sweden and the United States," Journal of Public Economics, Elsevier, vol. 79(1), pages 205-236, January. [Downloadable!] (restricted)
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  13. McConnell, K. E., 1997. "Does Altruism Undermine Existence Value?," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 22-37, January. [Downloadable!] (restricted)
  14. Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November. [Downloadable!] (restricted)
  15. Cropper, Maureen & Laibson, David, 1998. "The implications of hyperbolic discounting for project evaluation," Policy Research Working Paper Series 1943, The World Bank. [Downloadable!]
  16. Jousten, Alain, 2001. "Life-cycle modeling of bequests and their impact on annuity valuation," Journal of Public Economics, Elsevier, vol. 79(1), pages 149-177, January. [Downloadable!] (restricted)
  17. Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November. [Downloadable!] (restricted)
  18. Harry Markowitz, 1952. "The Utility of Wealth," Journal of Political Economy, University of Chicago Press, vol. 60, pages 151. [Downloadable!] (restricted)
  19. Cropper, Maureen L & Aydede, Sema K & Portney, Paul R, 1994. "Preferences for Life Saving Programs: How the Public Discounts Time and Age," Journal of Risk and Uncertainty, Springer, vol. 8(3), pages 243-65, May.
  20. George Loewenstein & Ted O'Donoghue & Matthew Rabin, 2003. "Projection Bias In Predicting Future Utility," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1209-1248, November. [Downloadable!] (restricted)
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  21. Samuelson, William & Zeckhauser, Richard, 1988. " Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kögel, Tomas, 2009. "On the Relation between Dual-Rate Discounting and Substitutability," Economics Discussion Papers 2009-10, Kiel Institute for the World Economy. [Downloadable!]
  2. Anthoff, David, 2009. "Optimal Global Dynamic Carbon Taxation," Papers WP278, Economic and Social Research Institute (ESRI). [Downloadable!]
  3. Anthoff, David & Tol, Richard S. J. & Yohe, Gary W., 2009. "Discounting for Climate Change," Economics Discussion Papers 2009-15, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  4. David Anthoff & Richard Tol, 2009. "The Impact of Climate Change on the Balanced Growth Equivalent: An Application of FUND," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(3), pages 351-367, July. [Downloadable!] (restricted)
    Other versions:
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