Empirical measures of factors affecting social rates of discount
Economists have long considered possible divergences between private and social rates of time preferences. In this paper, we investigate factors hypothesized to affect this potential divergence. Results indicate that time preferences of individuals may be influenced by: 1. whether the resource in question is publicly or privately managed (respondents tend to have lower rates of time prefernce for publicly managed resources); and 2. the type of good being managed (respondents tend to have lower rates of time preference for income derived from a forest than for income derived from a portfolio of stocks and bonds). Additional factors which may influence the revealed rate of time preference include the pattern of benefits derived over time and various personal characteristics of the respondent. Although numerous methodological problems cloud the issues, our results suggest that capital markets may fail to aggregate utility over individuals and between goods, and that it may therefore be appropriate for governments to consider using lower rates of discount than the private sector, and to vary the rate used according to the type of good being evaluated. Copyright Kluwer Academic Publishers 1993
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Volume (Year): 3 (1993)
Issue (Month): 1 (February)
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