Valuing improvements in lifetime endowments in markets with no borrowing

Kevin Frick

Atlantic Economic Journal, 2002, vol. 30, issue 2, 195 pages

Abstract: The objective is to determine whether single period data regarding willingness to pay for improvements in lifetime endowments when consumers cannot borrow can be used to measure the net present value of the improvements. When consumers who discount utility at the real interest rate can borrow and save, the willingness to pay for improvements in lifetime endowments is the net present value of the improvements. A single period measure of the willingness to pay for improvements in lifetime endowments without borrowing is at least as large as the improvement in the period in which the individual has the opportunity to obtain the stream of improvements. The sum of single period measures is an upper bound for the net present value of improvements in lifetime endowments. Copyright International Atlantic Economic Society 2002

Date: 2002
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DOI: 10.1007/BF02299162

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