Grantee Research Project Results

1999 Progress Report: Assessing Preferences for Environmental Decisions with Long-Term Consequences

EPA Grant Number: R826611
Title: Assessing Preferences for Environmental Decisions with Long-Term Consequences
Investigators: Keller, Robin , Eppel, Thomas
Current Investigators: Keller, Robin , Guyse, Jeffery L. , Biswas, Dipayan , Strazzera, Elisabetta , Eppel, Thomas
Institution: University of California - Irvine
EPA Project Officer: Chung, Serena
Project Period: July 1, 1998 through June 30, 2000 (Extended to July 31, 2001)
Project Period Covered by this Report: July 1, 1998 through June 30, 1999
Project Amount: $181,851
RFA: Decision-Making and Valuation for Environmental Policy (1998) RFA Text | Recipients Lists
Research Category: Environmental Justice

Objective:

The main objectives of the study are to: (1) expand previous research on discount rates for monetary consequences to nonmonetary consequences (e.g., environmental impacts), (2) conduct experimental studies to determine what factors have an impact on monetary and nonmonetary discount rates, (3) apply multiattribute decision analysis to examine time preferences, and (4) crossvalidate and generalize the experimental results with information from professional analysts to develop sound assessment procedures that will help policymakers determine the temporal perceptions of different stakeholders in environmental decisions.

Progress Summary:

An experimental study was designed and conducted to analyze individuals' preferences for sequences of outcomes over time related to air quality and near-shore ocean water quality. We were particularly interested in whether temporal preferences for monetary outcome streams differ from preferences for sequences of nonmonetary outcomes. We compared our results for the environmental sequences with results on preferences for sequences of health and monetary outcomes (from the participants in this study and previous research conducted by Gretchen Chapman, George Loewenstein, and others). Generally, participants gave significantly lower ratings to environmental and health sequences (with equal means) that worsened over time, relative to the ratings they gave to sequences that either remained the same or improved over time. This pattern is reversed when facing sequences of monetary payments. This preference structure held for both short (5-year) and long (50-year) time horizons, and was confirmed with choice data. The generally observed preference pattern implies negative discount rates for nonmonetary outcome sequences, but positive discount rates for monetary outcome sequences. A relationship between expectations and choices also was found. A model proposed by Loewenstein and Drazen Prelec for the valuation of sequences of outcomes was applied to the current data set and compared to the traditional discounting model. In all cases, the model that incorporated "Gestalt" features of the sequence (slope and uniformity) performed better than the net present value discounting model at predicting the mean ratings for the sequences in the different domains.

Future Activities:

Further study and experimentation will take place to investigate whether or not the preference patterns observed in the air and water quality domains also exist in the "lives saved" and "lives lost" domains. Particular temporal preference anomalies will be incorporated into the experimental questionnaires to further expand the body of knowledge on preferences for environmental events over time.

We also plan to gather information from professionals who work on environmental decisions with long-term consequences to investigate how the experimental results can guide us in the assessment of the opinions of "experts." We hope to use the various professional groups who provided input to a project by Decision Insights, Inc., as respondents. This project developed decision analysis models and accompanying software to evaluate different strategies to mitigate effects due to exposure to electromagnetic fields over time. The evaluation criteria covered a broad range of monetary, environmental, and health concerns, and covered a period of 30 years. The recommended alternatives would change depending on what kind of discounting pattern is used as an input to the computer models, so it is important to develop and refine decision analysis methods for assessing temporal preferences.

Journal Articles:

No journal articles submitted with this report: View all 22 publications for this project

Supplemental Keywords:

discounted utility theory, decision analysis, environmental policy, contingent valuation, nonmarket valuation, decisionmaking, psychological, preferences, survey, modeling, public policy, ambient air, marine water, measurement methods, social science., RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Economics & Decision Making, Ecological Risk Assessment, decision-making, Social Science, Ecology and Ecosystems, benefits assessment, public values, multi-criteria decision analysis, multi-objective decision making, discount rates, ecosystem valuation, non-market valuation, policy analysis, social impact analysis, community involvement, incentives, long-term consequences, multi-attribute utility, time preferences, environmental values, public policy, decision analysis, social psychology, stated preference, decision making, environmental policy

Relevant Websites:

http://www.gsm.uci.edu/~keller

Progress and Final Reports:

Original Abstract

The 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.