Contributions to the Economics of Time Preference
thesisposted on 01.12.1986, 00:00 by James Caleb Case
This dissertation addresses four hypotheses in regards to future valuation by individuals. These include a hypothesis that the provision of public goods in the far future, a period in excess of an individual's lifetime and the lifetimes of his/her immediate descendants, is a likely component of utility functions. The second hypothesis is that the importance of distant future public goods provision is unaffected by contemporary consumption levels. The third hypothesis suggests that individuals discount the far future differently than they discount future events in the near future. The final hypothesis is that the extent of future valuation is determined by specific concern based upon religious or ethical considerations as well as concern for descendants. Evidence supporting all four hypotheses was derived from a survey instrument administered to a group of 147 students at the University of Wyoming and a second group of 60 office workers in Illinois. These responses were largely consistent with a zero discount rate on far future events. These results imply that far future impacts are undervalued in benefit-cost analysis. A cautious approach is recommended in policy analysis, especially when contemporary activity is characterized by irreversibilities.