Debate about the appropriate value for any single social discount rate for public projects stems in part from our lack of knowledge about how individual discount rates vary across people and across choice contexts. It would be valuable to be able to estimate aggregate willingness to pay for a public project as a function of heterogeneous individual discount rates. We could then contemplate a strategy of counterfactual simulation of aggregate willingness to pay for the same project under the systematically lower discount rates that are often argued to be compatible with the normative goal of intergenerational equity. Using a sample of roughly 15,000 choices by over 2000 individuals, we estimate prototype utility-theoretic models concerning private tradeoffs involving money over time that reveal individual-specific discount rates. Statistically significant heterogeneity in discount rates is quantified along many dimensions for an exponential discounting model, a competing hyperbolic model, and a generalized hyperbolic model. We control for experimentally differentiated choice scenarios and elicitation formats, for sociodemographic heterogeneity, and for complex forms of heteroscedasticity.
Supplementary materials: Referee comments on original submission