Lookup NU author(s): Professor Susan Chilton,
Emeritus Professor Michael Jones-Lee,
Dr Hugh Metcalf
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND).
Time discounting is central to the valuation of future health and mortality risks in public sector allocative decision-making, particularly for environmental policies with delayed health impacts. Using a Risk-Risk trade-off survey, we elicit discount rates for fatality risks and establish discounting functional forms on both a sample and an individual level. We find wide variation in implicit discount rates for fatality risk between individuals, as well as between-individual heterogeneity in discounting functional forms. In aggregate, the sample is best characterised by subadditive discounting. Our work has implications for the academic investigation of intertemporal choice involving mortality risks, and potentially for the evaluation of policy options with delayed mortality risk outcomes. A thought experiment cautions against the standard practice of assuming that exponential discounting characterises society's time preferences.
Author(s): McDonald R, Chilton S, Jones-Lee M, Metcalf H
Publication type: Article
Publication status: Published
Journal: Journal of Environmental Economics and Management
Print publication date: 01/03/2017
Online publication date: 23/11/2016
Acceptance date: 19/11/2016
Date deposited: 29/11/2016
ISSN (print): 0095-0696
ISSN (electronic): 1096-0449
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