Time Discounting, Ambiguity Aversion, and Preferences for Future Environmental Policies: Evidence from Discrete Choice Experiments

Kenjiro Hirata, Shinsuke Ikeda, Masako Ikefuji, Myong-Il Kang and Katsunori Yamada

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: Designing efficient environmental policies requires knowledge about households' preference parameters for their intertemporal decisions. By conducting an original Internet-based survey using Japanese participants (n=2,906) and a follow-up survey (n=1,407), we examine how people evaluate pro-environmental policies depending on their individual attributes. The discount rates for environmental outcomes are estimated by using a discrete choice experiment. We show that participants' discount rates in environmental policy choices are on average negative and future-biased. Those who are more ambiguity-averse and patient for money concerns, and anticipate more rapid increases in future temperatures are more willing to incur present-day tax burdens to ensure future environmental improvements. These results are highly robust against alternative estimation models and stable when using the follow-up survey data obtained 21 months later.

Date: 2017-09
New Economics Papers: this item is included in nep-cbe, nep-dcm, nep-env, nep-exp and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1012

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