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An Empirical Investigation on the Social Time-Preference Rate for the United Kingdom

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  • E Kula

    (Department of Economics and Manpower Studies, University of Ulster at Coleraine, Coleraine, County Londonderry BT52 1SA, Northern Ireland)

Abstract

In this paper, a social time-preference rate is derived for the United Kingdom on the basis of a conventional utility function. The model which the estimate is based upon is developed in a two-period analysis in which a representative individual is the central figure. The component parameters of this rate are: growth rate of real consumption, elasticity of marginal utility of consumption, and a pure time-discount rate derived on the basis of individuals' survival probabilities. Then each of these parameters is estimated separately with the final result of 3.65% which is very much in line with expectations of many economists.

Suggested Citation

  • E Kula, 1985. "An Empirical Investigation on the Social Time-Preference Rate for the United Kingdom," Environment and Planning A, , vol. 17(2), pages 199-212, February.
    • Handle: RePEc:sae:envira:v:17:y:1985:i:2:p:199-212
    DOI: 10.1068/a170199
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    References listed on IDEAS

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    1. Stephen A. Marglin, 1963. "The Social Rate of Discount and The Optimal Rate of Investment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 77(1), pages 95-111.
    2. Landauer, Carl, 1969. "On the Social Rate of Discount: Comment," American Economic Review, American Economic Association, vol. 59(5), pages 917-918, December.
    3. Otto Eckstein, 1961. "A Survey of the Theory of Public Expenditure Criteria," NBER Chapters, in: Public Finances: Needs, Sources, and Utilization, pages 439-504, National Bureau of Economic Research, Inc.
    4. E. J. Mishan, 1967. "Criteria for Public Investment: Some Simplifying Suggestions," Journal of Political Economy, University of Chicago Press, vol. 75(2), pages 139-139.
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    1. Cruz Rambaud, Salvador & Muñoz Torrecillas, María José, 2007. "Obtención de la tasa social de descuento a partir de la tasa de fallo de una distribución estadística: Aplicación empírica/Obtaining the social discount rate from the hazard rate of a statistical dist," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 25, pages 49-82, Abril.
    2. R. A. Sharma & M. J. McGregor & J. F. Blyth, 1991. "The Social Discount Rate For Land‐Use Projects In India," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(1), pages 86-92, January.
    3. Akbulut, Hale & Seçilmiş, Erdem, 2019. "Estimation of a social discount rate for Turkey," Socio-Economic Planning Sciences, Elsevier, vol. 67(C), pages 78-85.
    4. Volodymyr Lipkan & Lydmyla Vasutynska & Tetyana Syvak, 2018. "Methods Of Analysis Of The Effectiveness Of Public Sector Projects: Features And Constraints," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(1).
    5. Michael Spackman, 2011. "Government discounting controversies: the valuation of social time preference," GRI Working Papers 68, Grantham Research Institute on Climate Change and the Environment.
    6. Eli P. Fenichel & Matthew J. Kotchen & Ethan T. Addicott, 2017. "Even the Representative Agent Must Die: Using Demographics to Inform Long-Term Social Discount Rates," NBER Working Papers 23591, National Bureau of Economic Research, Inc.

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