Empirical and public choice evidence for hyperbolic social discount rates and the implications for intergenerational discounting
The derivation of the correct discount rate for intergenerational projects in Cost Benefit Analysis is particularly contentious. Public choice has resulted in lower discretionary exponential discount rates for many intergenerational projects in Britain and the USA. This is shown to be strong indirect evidence that the true social discount rate may be a hyperbolic (rather than an exponential) function. There is also empirical evidence for this hypothesis. The hyperbolic nature of discounting is also a standard finding in the behavioural sciences. For intergenerational time frames hyperbolic discount rates should be employed together with exponential discount rates in cost-benefit sensitivity analyses. Copyright Kluwer Academic Publishers 1995
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 5 (1995)
Issue (Month): 4 (June)
|Contact details of provider:|| Web page: http://www.springerlink.com/link.asp?id=100263|
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.:
- Lind, Robert C., 1990. "Reassessing the government's discount rate policy in light of new theory and data in a world economy with a high degree of capital mobility," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages S8-S28, March.
- Landauer, Carl, 1969. "On the Social Rate of Discount: Comment," American Economic Review, American Economic Association, vol. 59(5), pages 917-18, December.
- N/A, 1989. "Comments," ILR Review, Cornell University, ILR School, vol. 43(1), pages 89-102, October.
- A. E. Fernández Jilberto, 1991. "Introduction," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 21(1), pages 3-9, April.
- Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-84, September.
- Uri Benzion & Amnon Rapoport & Joseph Yagil, 1989. "Discount Rates Inferred from Decisions: An Experimental Study," Management Science, INFORMS, vol. 35(3), pages 270-284, March.
- Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
- Maureen L. Cropper & Sema K. Aydede & Paul R. Portney, 1991. "Discounting Human Lives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(5), pages 1410-1415.
- Scheraga, Joel D., 1990. "Perspectives on government discounting policies," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages S65-S71, March.
- Lyon, Randolph M., 1990. "Federal discount rate policy, the shadow price of capital, and challenges for reforms," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages S29-S50, March.
- Cropper, Maureen L & Aydede, Sema K & Portney, Paul R, 1992. "Rates of Time Preference for Saving Lives," American Economic Review, American Economic Association, vol. 82(2), pages 469-72, May.
- Loewenstein, George & Thaler, Richard H, 1989. "Intertemporal Choice," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 181-93, Fall.
- Charles M. Harvey, 1986. "Value Functions for Infinite-Period Planning," Management Science, INFORMS, vol. 32(9), pages 1123-1139, September.
- Markandya, Anil, 2006. "David Pearce," Energy Policy, Elsevier, vol. 34(5), pages 499-499, March.
- Martin Luckert & Wiktor Adamowicz, 1993. "Empirical measures of factors affecting social rates of discount," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(1), pages 1-21, February.
When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:5:y:1995:i:4:p:413-423. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.