Future-Generation Perception: Equal or Not Equal? Long-Term Individual Discount Rates for Poland

Energy-related investments gain increasing attention nowadays, particularly in Poland due to clean-energy investment needed to limit greenhouse gas emissions (GHG) and counteract climate change. However, economic appraisal is problematic: the longevity of impacts inextricably involves intergenerational ethical considerations. A crucial parameter is the choice of a discount rate. The predominant approach to estimate the discount rate in EU countries is the Ramsey rule, based on macroeconomic data, but not referring directly to society’s preferences. Those are considered by studies using surveys to elicit individual discount rates (IDR), but rarely concentrating on intergenerational time frame. The paper aims at delivering an insight into the intergenerational intertemporal preferences for Poland (households, n = 471) focusing on whether respondents are willing to declare zero discount rate intergenerationally and whether their choices differ between the short- and long-term perspectives and between human lives and money. To elicit IDR, two hypothetical investment scenarios were designed: lifesaving programs and lottery gains with delays from 10 to 150 years accompanied by attitude and socioeconomic questions. The results indicate that IDR follows hyperbolic time-decline, and a considerable share of respondents (around 20%) are willing to treat future generations as equally important in the case of human lives, while this proportion for monetary gains is two times lower. The IDR drivers differ between lives and money in respect of socioeconomic profile and attitude characteristics as well as between intragenerational and intergenerational time frames. The findings support (a) the rationale for distinct treatment of intergenerational allocations, (b) the divergence of preferences between public and private impacts, and (c) the switch from single to declining discount rate regime in Poland.

Temporal Discounting of Money and Face Masks During the COVID-19 Pandemic: The Role of Hoarding Level

The current study examines the association of individual hoarding levels with temporal discounting of different commodities during the COVID-19 pandemic. Based on their hoarding level, participants were assigned to the Hoarding Group (HG) or the Non-Hoarding Group (NHG). Participants performed two delay discounting tasks: a traditional task with monetary options and a modified task, where money was replaced with disposable surgical masks, a needed commodity during the pandemic. Results revealed a stronger preference for immediate commodity, therefore a higher discount rate, when evaluating surgical masks compared to money in the whole sample, and an overall higher tendency in discounting both type of rewards in the NHG compared to the HG. Moreover, non-hoarders discounted money significantly more than hoarders, while no significant differences were detected in the surgical mask version of the task. Possible explanations for this result are discussed in the light of a situational frame that makes salient the notion of scarcity, like the one induced by the COVID-19 pandemic. The hoarding dimension of cluttering was found to be the only dimension to significantly correlate with the discount rate on surgical masks. Altogether, these findings shed light on the role of general hoarding level and specific hoarding dimensions on intertemporal preferences with different commodities by contributing to the theoretical debate about impulsivity in hoarders' behavior. Furthermore, the present results help to understand the general population's preferences during times of crisis, thus contributing to the investigation of the effects of COVID-19 on consumers' behavior.

Intertemporal Choice with Continuity Constraints

We consider a model of intertemporal choice where time is a continuum, the set of instantaneous outcomes (e.g., consumption bundles) is a topological space, and intertemporal plans (e.g., consumption streams) must be continuous functions of time. We assume that the agent can form preferences over plans defined on open time intervals. We axiomatically characterize the intertemporal preferences that admit a representation via discounted utility integrals. In this representation, the utility function is continuous and unique up to positive affine transformations, and the discount structure is represented by a unique Riemann–Stieltjes integral plus a unique linear functional measuring the long-run asymptotic utility.

The foreign-language discount effect: Using English increases intertemporal discount rates through more distant future perception

Although the foreign language effect (FLE) has been associated with more rational decision-making, we do not know whether it can exert this effect on intertemporal decisions. Native speakers of languages with a high future-time reference (FTR) have been found to produce higher rates of discounting, but we do not yet know whether intertemporal preferences can also be modulated when high FTR language is used by a foreign speaker. Across two experiments (N=486), we found that switching from a low-FTR native language (Chinese) to a high-FTR foreign language (English) was consistently linked with higher rates of discounting, what we call the foreign-language discount effect. These results, which run counter to the mechanism proposed by FLE (Experiment 1), show that a more distant future perception is the chief factor underlying the observed effect (Experiment 2). Our findings call for caution in the use of the FLE as a beneficial debiasing effect.

Porter Hypothesis vs Pollution Haven Hypothesis: Can There Be Environmental Policies Getting Two Eggs in One Basket?

The Porter hypothesis and the pollution haven hypothesis seem to predict opposite reactions by firms facing environmental regulation, as the first invokes the arising of a win–win solution while the second envisages the possibility for firms to flee abroad. We illustrate the possibility of designing policies (taking the form of either emission taxation or environmental standards) able to eliminate firms’ incentives to relocate their plants abroad and create a parallel incentive for them to deliver a win–win solution by investing either in replacement technologies under emission taxation, or in abatement technologies under an environmental standard. This is worked out in a Cournot supergame in which firms may activate the highest level of collusion compatible with their intertemporal preferences.

The Dilemmas of Public Vs. Private Goods Discounting for Long-Term Investment Appraisal: The Puzzle of Citizen and Consumer Approaches to Valuation

Research background: An investment appraisal applies a single discount rate across all effects. However, this may be insufficient for heterogenous environmental impacts, mixing private and public goods as well as use and non-use values, where individuals may have multiple intertemporal preferences due to their duality to act as consumer or citizen. Purpose: The paper aims at identifying the scope of discrepancies in the level of discount rate for public and private as well as use-and non-use investment gains. Research methodology: The contingent valuation method is used to elicit stated discount rates for 2 hypothetical investments: environmental or financial gains to distinguish between public and private domain accompanied by two time-frames: short (use values) and long (non-use values). Results: The discount rate for the environment is lower than for money. It is also lower for the long-term horizon in comparison with the short-term perspective. The discrepancies are observed also for explanatory variables in respect to a socio-economic profile and attitude characteristics. Novelty: The paper adds to the discussion on valuation discrepancies between self-interested consumers and socially oriented citizens. The scarcity of previous research examining discount rates for public/private goods as well as the short/long-time horizon make the results relevant for public policy dealing with climate change and environmental protection, providing an insight into individual intertemporal preferences.

Time-inconsistent preferences and the minimum legal tobacco consuming age

In both the United States of America and the European Union, Member States are encouraged to prevent young people from starting to smoke by forbidding selling tobacco products to people under a certain age. By contrast, there are in general no legal minimum age requirements for consuming those products. Our aim is to address such discrepancy from a theoretical viewpoint by focusing on the case where people have time-inconsistent preferences. Specifically, we build a three-period (youth, adulthood, old age) model of smoking decision in which individual intertemporal preferences are present-biased. Then, using this model, we show that when agents are naive, that is when they are unaware that their intertemporal preferences are time-inconsistent, it may be worthwhile, from the individual viewpoint, to legally prevent young people from smoking. This conclusion does not always hold, because what is good for an agent in youth can be disputable in adult age (and conversely). When individuals are sophisticated, that is, not naive, a legal smoking age (either for buying, consuming or selling tobacco products) is pointless. This conclusion is also reached if one follows the continuing person approach advocated by Sugden. JEL Classification Numbers : I12, I18, K32, D15

The Effect of Armed Conflict on Savings Rates: International Evidence from 1980 to 2015

Economic growth theory highlights the importance of saving rates to explain the long-run economic performance of economies. While economic theory has provided an analytical and empirical framework to understand the determinants of saving rates, one of the limitations is that it excludes from the analysis the potential effects of armed conflict and political instability, although it has been demonstrated that such situations can affect intertemporal preferences in terms of consumption and saving. Using a sample of 55 countries with/without conflict from 1980 to 2015, we analyze whether aggregate savings rates are negatively correlated with the existence, intensity, and duration of an armed conflict. The results indicate that countries that have suffered some type of conflict exhibit a saving rate 2.7% lower on average than the rate exhibited by countries that have not suffered such conflict. Additionally, if there is a high-intensity conflict, the saving rates decreases 2.5% more relative to countries that experience low-intensity conflict. Finally, we found a nonlinear relationship between saving rates and conflict duration, suggesting that the impact of conflict on savings decreases with time. These results extend the literature on the effects of armed conflicts on the long-run economic growth.