Discount Rates in Risk v. Money and Money v. Money Tradeoffs
AbstractWe use data from a survey of residents of five Italian cities conducted in late Spring 2004 to estimate the discount rates implicit in (a) money v. future risk reductions and (b) money v. money tradeoffs. We find that the mean personal discount rate is 2% in (a) and 8.7% in (b). The latter is lower than the discount rates estimated in comparable situations in many recent studies, greater than market interest rates in Italy at the time, and exhibits modest variation with age and gender. The discount rate implicit in money v. risk tradeoffs is in line with estimates from studies in the US and Europe, and does not depend on observable individual characteristics.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.8.
Date of creation: Jan 2006
Date of revision:
Value of a statistical life; Latent risk reductions; Individual discount rates; Stated preference questions;
Find related papers by JEL classification:
- J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-02-19 (All new papers)
- NEP-MAC-2006-02-19 (Macroeconomics)
- NEP-MON-2006-02-19 (Monetary Economics)
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- Alberini, Anna & Chiabai, Aline, 2007.
"Urban environmental health and sensitive populations: How much are the Italians willing to pay to reduce their risks?,"
Regional Science and Urban Economics,
Elsevier, vol. 37(2), pages 239-258, March.
- Anna Alberini & Aline Chiabai, 2006. "Urban Environmental Health and Sensitive Populations: How Much Are the Italians Willing to Pay to Reduce Their Risks?," ERSA conference papers ersa06p293, European Regional Science Association.
- Anna Alberini & Aline Chiabai, 2005. "Urban Environmental Health and Sensitive Populations: How Much are the Italians Willing to Pay to Reduce Their Risks?," Working Papers 2005.105, Fondazione Eni Enrico Mattei.
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