Grantee Research Project Results
2001 Progress Report: Understanding Observed Differences in Time-Preference Rates
EPA Grant Number: R827931Title: Understanding Observed Differences in Time-Preference Rates
Investigators: Gregory, Robin
Current Investigators: Gregory, Robin , Slovic, Paul , Knetsch, Jack , Lichtenstein, Sarah , Finucane, Melissa L. , Peters, Ellen , Arvai, Joseph , Burns, Katie
Institution: Decision Science Research Institute Inc.
Current Institution: Decision Science Research Institute Inc. , The Ohio State University , University of Oregon
EPA Project Officer: Chung, Serena
Project Period: September 30, 1999 through September 29, 2001 (Extended to March 31, 2003)
Project Period Covered by this Report: September 30, 2000 through September 29, 2001
Project Amount: $228,463
RFA: Decision-Making and Valuation for Environmental Policy (1999) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
The main objective of this research project is to improve our understanding of the reasons why people may discount future gains or future losses, as well as different types of future outcomes, at different rates. Results could influence the analysis of initiatives to protect the natural environment and public health and contribute to a reconsideration of the conventional discounting practices of economic benefit-cost and policy analysis.
Progress Summary:
The second year of this research project focused on three guiding project questions. The first is to continue to test whether there are systematic differences in expressed time preferences, depending on whether questions are framed as gains or as losses. In terms of the four-quadrant diagram we have been using (see Figure 1), this means a comparison between Quadrant I (the standard willingness-to-pay quadrant) and Quadrant III (the standard willingness-to-accept quadrant). Our results demonstrate that discount rates for Quadrant I (gains) are significantly higher than for Quadrant III (losses). Responses for Quadrants II and IV are, as expected, intermediate but these quadrants are rarely appropriate for valuation purposes.
Quadrant 1 |
Future Gain Quadrant II (choice of gains) |
-Money Quadrant IV (choice of losses) |
+Money |
Figure 1. Four-Quadrant Diagram for Displaying Future Gains and Future Losses
The second research question asks whether there are systematic differences in expressed time preferences for different types of goods (e.g., environmental, health, financial). As the study evolved, we realized that differences in time preferences may reflect the emotional or affective response elicited by characteristics of the item, rather than solely by their type.
The third research question involves taking these results into the domain of specific policy questions relevant to an agency such as the U.S. Environmental Protection Agency. This concern has guided our selection of examples and the experimental focus.
Future Activities:
We will revise submitted papers to the extent suggested by reviewers and we will continue to work on the remaining draft papers so that they can be submitted for publication consideration. We may want to run one more small set of experiments to test out ideas that arose from the February and June 2001 rounds of experiments conducted in Eugene, OR.
Journal Articles:
No journal articles submitted with this report: View all 11 publications for this projectSupplemental Keywords:
time preferences, discounting, context, benefit-cost analysis., RFA, Economic, Social, & Behavioral Science Research Program, decision-making, Economics & Decision Making, intertemporal choices, alternative compensation, policy analysis, social psychology, surveys, discounting future gains, time-preference rates, community involvement, decision analysis, economic benefits, public issues, risk management, economic incentives, environmental values, preference formation, socioeconomics, cost/benefit analysis, environmental policy, long-term consequences, endowment effect, psychological attitudes, interviews, public policy, benefits assessment, econometric analysisProgress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.