Risk Attitudes and Heterogeneous Rates of Time Preference

35 Pages Posted: 14 May 2007

See all articles by Robert L. Scharff

Robert L. Scharff

Ohio State University - Department of Consumer Sciences

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

Date Written: 2005

Abstract

This paper examines the relationship between risk attitudes and individual rates of time preference. We find that heterogeneous risk preferences and their allied behaviors are correlated with differences in individual discount rates. To illustrate our theory we examine the rates of time preference with respect to discounted years of life for smokers, former smokers, and nonsmokers. Of the subgroups examined, smokers have the highest and former smokers have the lowest rates of time preference. Estimates of the different implicit values of a statistical life for these groups are consistent with the different estimated rates of time preference.

Keywords: risk attitudes, time preference, value of life, smoking

JEL Classification: D81

Suggested Citation

Scharff, Robert L. and Viscusi, W. Kip, Risk Attitudes and Heterogeneous Rates of Time Preference (2005). Available at SSRN: https://ssrn.com/abstract=985282 or http://dx.doi.org/10.2139/ssrn.985282

Robert L. Scharff (Contact Author)

Ohio State University - Department of Consumer Sciences ( email )

Columbus, OH 43210
United States
614-292-4549 (Phone)

W. Kip Viscusi

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/bio/?pid=w-kip-viscusi

National Bureau of Economic Research (NBER)

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

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://as.vanderbilt.edu/economics/bio/wkip-viscusi/

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