Discounting Future Green: Money Vs. The Environment

Abstract

In three studies, participants made choices between hypothetical financial, environmental, and health gains and losses that took effect either immediately or with a delay of 1 or 10 years. In all three domains, choices indicated that gains were discounted more than losses. There were no significant differences in the discounting of monetary and environmental outcomes, but health gains were discounted more and health losses were discounted less than gains or losses in the other two domains. Correlations between implicit discount rates for these different choices suggest that discount rates are influenced more by the valence of outcomes (gains vs. losses) than by domain (money, environment, or health). Overall, results indicate that when controlling as many factors as possible, at short to medium delays, environmental outcomes are discounted in a similar way to financial outcomes, which is good news for researchers and policy makers alike.

Keywords: temporal discounting, intertemporal choice, environment, health, money