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Using the stated preference method for the calculation of social discount rate

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  • Andrea Tabi

    () (Corvinus University of Budapest, Department of Environmental Economics and Technology, Budapest, Hungary)

Abstract

The aim of this paper is to build the stated preference method into the social discount rate methodology. The first part of the paper presents the results of a survey about stated time preferences through pair-choice decision situations for various topics and time horizons. It is assumed that stated time preferences differ from calculated time preferences and that the extent of stated rates depends on the time period, and on how much respondents are financially and emotionally involved in the transactions. A significant question remains: how can the gap between the calculation and the results of surveys be resolved, and how can the real time preferences of individuals be interpreted using a social time preference rate. The second part of the paper estimates the social time preference rate for Hungary using the results of the survey, while paying special attention to the pure time preference component. The results suggest that the current method of calculation of the pure time preference rate does not reflect the real attitudes of individuals towards future generations.

Suggested Citation

  • Andrea Tabi, 2013. "Using the stated preference method for the calculation of social discount rate," Society and Economy, Akadémiai Kiadó, Hungary, vol. 35(2), pages 167-186, August.
  • Handle: RePEc:aka:soceco:v:35:y:2013:i:2:p:167-186 Note: The research described herein was financed by the following grant: OTKA105228.
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    More about this item

    Keywords

    social discount rate; stated preferences; revealed preferences; cost-benefit analysis;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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