Hyperbolic Discounting of Public Goods

43 Pages Posted: 13 Apr 2006 Last revised: 13 Aug 2022

See all articles by W. Kip Viscusi

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Joel C. Huber

Duke University - Fuqua School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 2006

Abstract

This article examines revealed rates of time preference for public goods, using environmental quality as the case study. A nationally representative panel-based sample of 2,914 respondents considered a series of 5 conjoint policy choices, yielding 14,570 decisions. Both the conditional fixed effect logit estimates of the random utility model and mixed logit estimates implied that the rate of time preference is very high for immediate improvements and drops off substantially thereafter, which is inconsistent with exponential discounting but consistent with hyperbolic discounting. The implied marginal rate of time preference declines and then rises. Estimates of the quasi-hyperbolic discounting parameter range from 0.48 to 0.61. People who are older are especially likely to have a high disutility from delays in improving water quality.

Suggested Citation

Viscusi, W. Kip and Huber, Joel C., Hyperbolic Discounting of Public Goods (January 2006). NBER Working Paper No. w11935, Available at SSRN: https://ssrn.com/abstract=876038

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

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National Bureau of Economic Research (NBER)

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Vanderbilt University - College of Arts and Science - Department of Economics

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Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://business.vanderbilt.edu/bio/w-kip-viscusi/

Vanderbilt University - Strategy and Business Economics

Nashville, TN 37203
United States

Joel C. Huber

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7785 (Phone)

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