Document Type
Article
Language
eng
Publication Date
4-2013
Publisher
Springer
Source Publication
Journal of Risk and Uncertainty
Source ISSN
0895-5646
Abstract
The observation of declining discount rates in experimental settings has led many to promote hyperbolic discounting over standard exponential discounting as the preferred descriptive model of intertemporal choice. I develop a new framework, consistent with the random utility model, which directly models the intertemporal utility function and produces explicit maximum likelihood estimates of discounting parameters. I apply this estimation method to a stated-preference survey of river basin cleanup options and revealed-preference lottery payment choices. Formal statistical tests fail to find evidence in support of hyperbolic or quasi-hyperbolic discounting. Annual discount rates range from ten to fourteen percent across the data sets and empirical specifications.
Recommended Citation
Meyer, Andrew G., "Estimating Discount Factors For Public and Private Goods and Testing Competing Discounting Hypotheses" (2013). Economics Faculty Research and Publications. 531.
https://epublications.marquette.edu/econ_fac/531
Comments
Accepted version. Journal of Risk and Uncertainty, Vol. 46, No. 2 (April 2013): 133-173. The final publication is available at Springer via DOI. © 2013 Springer. Used with permission.
Andrew Meyer was affiliated with Ohio Wesleyan University at the time of publication.
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