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Eliciting Individual-Specific Discount RatesTrudy Ann CameronUniversity of Oregon - Department of Economics Geoffrey R. GerdesBoard of Governors of the Federal Reserve System January 1, 2003 University of Oregon Economics Working Paper No. 2003-10 Abstract: Longstanding debate over the appropriate social discount rate for public projects stems from our lack of knowledge about how individual discount rates vary across people and across choice contexts. Using a sample of roughly 15,000 choices by over 2000 individuals, we estimate utility theoretic models concerning private tradeoffs involving money over time that reveal individual specific discount rates. We control for experimentally differentiated choice scenarios, sociodemographic heterogeneity, and elicitation formats, and complex forms of heteroscedasticity. Statistically significant heterogeneity in discount rates is quantified for both an exponential discounting model and a competing hyperbolic model, but neither specification clearly dominates.
Number of Pages in PDF File: 49 JEL Classification: D91, H4, C25, C35 working papers seriesDate posted: November 4, 2003Suggested CitationContact Information
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