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Individual Discount Rates And Climate Change: Is Discount Rate Associated With Support For A Carbon Tax?

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  • DAVID AMDUR

    (Department of Accounting, Business and Economics, Muhlenberg College, 2400 West Chew St., Allentown, PA 18064, United States)

  • DONALD DALE

    (Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60201, United States)

  • CHRISTOPHER BORICK

    (Muhlenberg College, 2400 West Chew St., Allentown, PA 18064, United States)

  • BARRY G. RABE

    (Ford School of Public Policy, University of Michigan, 735 S. State St., Ann Arbor, Michigan 48109, United States)

Abstract

The issue of climate change is often framed as one in which contemporary actions, often with affixed costs, are necessary in order to prevent even greater costs being paid during a period in the future. Under such a framework it is thus necessary to calculate the rate in which future benefits are discounted to reflect current values. In this paper we examine how individual level discount rates affect their support for a policy tool that incurs contemporary costs in an effort to prevent future environmental damages. We find that individuals with higher discount rates are significantly less likely to support the imposition of a carbon tax in comparison with individuals that have lower discount rates. Even when controlling for other individual level attributes such as party affiliation a person’s rate for discounting the future is shown to be a strong predictor of their support for a carbon tax.

Suggested Citation

  • David Amdur & Donald Dale & Christopher Borick & Barry G. Rabe, 2015. "Individual Discount Rates And Climate Change: Is Discount Rate Associated With Support For A Carbon Tax?," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 6(04), pages 1-14, November.
    • Handle: RePEc:wsi:ccexxx:v:06:y:2015:i:04:n:s2010007815500189
    DOI: 10.1142/S2010007815500189
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    References listed on IDEAS

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    Cited by:

    1. Beatrice Magistro, 2022. "The influence of financial and economic literacy on policy preferences in Italy," Economics and Politics, Wiley Blackwell, vol. 34(2), pages 351-381, July.

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