Individual Time Preferences and Social Discounting: A Survey and A Meta-Analysis

Abstract: The choice of an appropriate social rate of discount is critical in the decision-making process on public investments. In this paper we briefly review the literature on social discounting, and address in particular a recently growing field of related research, that is, individual time preferences. An explicit consideration and analysis of the behaviour of individuals regarding the concept and the use of an appropriate social discount rate are essential for balanced decision making in the public sector, for example, in the field of resource or environmental policy. It is noteworthy that the empirical literature shows considerable variation in the estimated values of individual discount rates. Therefore, we present here the results from a meta-analysis conducted over more than 40 experimental and field studies which report individual discount rate estimates. We find in our research that the experimental design of a study has a decisive impact on these estimates, and conclude that our meta-regression function has a low transfer value.