Evidence of variable discount rates and non-standard discounting in mortality risk valuation |
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| Institution: | 1. Institute of Education, National Sun Yat-sen University, Kaohsiung 80424, Taiwan;2. Department of Healthcare Management and Medical Informatics, Kaohsiung Medical University, Kaohsiung 80708, Taiwan;1. Center for Alcohol and Addictions Studies, Brown University, Providence, RI, United States;2. University of South Dakota, Department of Psychology, 414 E. Clark Street, Vermillion, SD 57069, United States;3. Syracuse University, Department of Psychology, 900 S. Crouse Ave., Syracuse, NY 13244, United States |
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| Abstract: | Time discounting is central to the valuation of future health and mortality risks in public sector allocative decision-making, particularly for environmental policies with delayed health impacts. Using a Risk-Risk trade-off survey, we elicit discount rates for fatality risks and establish discounting functional forms on both a sample and an individual level. We find wide variation in implicit discount rates for fatality risk between individuals, as well as between-individual heterogeneity in discounting functional forms. In aggregate, the sample is best characterised by subadditive discounting. Our work has implications for the academic investigation of intertemporal choice involving mortality risks, and potentially for the evaluation of policy options with delayed mortality risk outcomes. A thought experiment cautions against the standard practice of assuming that exponential discounting characterises society's time preferences. |
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| Keywords: | Discounting Time preference VSL Latency Mortality risk Valuation Resource allocation |
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