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Time Discounting, Ambiguity Aversion, and Preferences for Future Environmental Policies: Evidence from Discrete Choice Experiments

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  • Kenjiro Hirata
  • Shinsuke Ikeda
  • Masako Ikefuji
  • Myong-Il Kang
  • Katsunori Yamada

Abstract

Designing efficient environmental policies requires knowledge about households' preference parameters for their intertemporal decisions. By conducting an original Internet-based survey using Japanese participants (n=2,906) and a follow-up survey (n=1,407), we examine how people evaluate pro-environmental policies depending on their individual attributes. The discount rates for environmental outcomes are estimated by using a discrete choice experiment. We show that participants' discount rates in environmental policy choices are on average negative and future-biased. Those who are more ambiguity-averse and patient for money concerns, and anticipate more rapid increases in future temperatures are more willing to incur present-day tax burdens to ensure future environmental improvements. These results are highly robust against alternative estimation models and stable when using the follow-up survey data obtained 21 months later.

Suggested Citation

  • Kenjiro Hirata & Shinsuke Ikeda & Masako Ikefuji & Myong-Il Kang & Katsunori Yamada, 2017. "Time Discounting, Ambiguity Aversion, and Preferences for Future Environmental Policies: Evidence from Discrete Choice Experiments," ISER Discussion Paper 1012, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:1012
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    References listed on IDEAS

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