Valuing future private and social bene®ts: The discounted utility model versus hyperbolic discounting models
نویسندگان
چکیده
It is standard practice in economic evaluation and in any economic analysis of future events to assume the discounted utility model on the part of economic agents. This paper compares the discounted utility model with three hyperbolic discounting models with respect to private and social ®nancial bene®ts. The discounting models are ®tted using non-linear regression techniques to data collected from the general public. Regression analysis is then used to test the theoretical validity of the models. The main test is whether the period of years for which the bene®t is to be delayed is a statistically signi®cant predictor of the respective values of the discounted utility model and the three hyperbolic discounting models. This tests whether these discounting models are satisfactory representations of the individualsÕ intertemporal preferences. The results show that there is evidence in favour of hyperbolic discounting models over the discounted utility model. There were not any statistically signi®cant dierences in the discounting models ®tted for the private and social ®nancial bene®ts. The regression results were very similar for the private and social ®nancial bene®ts. Ó 2000 Elsevier Science B.V. All rights reserved. PsycINFO classi®cation: 2340 Journal of Economic Psychology 21 (2000) 191±205 www.elsevier.com/locate/joep * Corresponding author. Tel.: +44 1224 552783; fax: +44 1224 662994. E-mail address: [email protected] (M. van der Pol). 0167-4870/00/$ see front matter Ó 2000 Elsevier Science B.V. All rights reserved. PII: S 0 1 6 7 4 8 7 0 ( 9 9 ) 0 0 0 4 2 2 JEL classi®cation: D90
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