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Gabaix, Xavier - 2017

and combining those signals with priors to form posteriors. These posterior expectations exhibit as-if discounting: agents … forecasting (e.g., those with more intelligence) exhibit less discounting. Agents with more domain-relevant experience exhibit … less discounting. Older agents exhibit less discounting (except those with cognitive decline). Agents who are encouraged to …

Persistent link: https://www.econbiz.de/10012960695

The Evolutionary Theory of Time Preferences and Intergenerational Transfers

Chu, C. Y. Cyrus - 2008

At each age an organism produces energy by foraging and allocates this energy among reproduction, survival, growth, and intergenerational transfers. We characterize the optimal set of allocation decisions that maximizes reproductive fitness. Time preference (the discount rate) is derived from...

Persistent link: https://www.econbiz.de/10012770874

Even the Representative Agent Must Die : Using Demographics to Inform Long-Term Social Discount Rates

Fenichel, Eli P. - 2017

We develop a demographically-based approach for estimating the utility discount rate (UDR) portion of the Ramsey rule. We show how age-specific mortality rates and life expectancies imply a natural UDR for individuals at each age in a population, and these can be aggregated into a...

Persistent link: https://www.econbiz.de/10012951868

Discount Rates

Cochrane, John H. - 2011

Discount rate variation is the central organizing question of current asset pricing research. I survey facts, theories and applications. We thought returns were uncorrelated over time, so variation in price-dividend ratios was due to variation in expected cashflows. Now it seems all...

Persistent link: https://www.econbiz.de/10013126211

The Choice of Discount Rate for Climate Change Policy Evaluation

Goulder, Lawrence H. - 2012

Nearly all discussions about the appropriate consumption discount rate for climate-change policy evaluation assume that a single discount rate concept applies. We argue that two distinct concepts and associated rates apply. We distinguish a social-welfare-equivalent discount rate appropriate for...

Persistent link: https://www.econbiz.de/10013101826

The Discount Rate for Public Policy Over the Distant Future

Li, Qingran - 2018

The choice of discount rate has a significant impact on net benefit estimates when costs today have benefits over long time horizons. Standard U.S. government practice for cost–benefit analysis is to bound such analysis using two alternative rates. These rates are meant to represent the rate...

Persistent link: https://www.econbiz.de/10012906264

Very Long-Run Discount Rates

Giglio, Stefano - 2014

We provide direct estimates of how agents trade off immediate costs and uncertain future benefits that occur in the very long run, 100 or more years away. We exploit a unique feature of housing markets in the U.K. and Singapore, where residential property ownership takes the form of either...

Persistent link: https://www.econbiz.de/10013053841

The Discounted Euler Equation : A Note

McKay, Alisdair - 2016

We present a simple model with income risk and borrowing constraints which yields a “discounted Euler equation.” This feature of the model mutes the extent to which news about far future real interest rates (i.e., forward guidance) affects current outcomes. We show that this simple model...

Persistent link: https://www.econbiz.de/10012995524

Excess Volatility : Beyond Discount Rates

Giglio, Stefano - 2016

We document a form of excess volatility that is irreconcilable with standard models of prices, even after accounting for variation in discount rates. We compare prices of claims on the same cash flow stream but with different maturities. Standard models impose precise internal consistency...

Persistent link: https://www.econbiz.de/10012997883

Discounting Under Disagreement

Heal, Geoffrey M. - 2013

A group of agents disagree about the appropriate inter temporal preferences to use when exploiting a common productive resource. They thus delegate decision making to a social planner who allocates consumption efficiently across heterogeneous individuals and over time. We define `policy...

Persistent link: https://www.econbiz.de/10013082765

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