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

1 February 1985

journal article
research article
Published by SAGE Publications in Environment and Planning A: Economy and Space

Vol. 17 (2) , 199-212
https://doi.org/10.1068/a170199

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.

Keywords

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