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Updated: Jul 12, 2026
07:47
Measuring Delay Discounting in Humans Using an Adjusting Amount Task
Published on: January 9, 2016
Can we use human judgments to determine the discount rate?
1Department of Psychology, University of Pennsylvania, Philadelphia 19104-6196, USA. baron@psych.upenn.edu
Summary
Human judgments on discount rates for environmental goods are inconsistent. This challenges using these judgments for cost-benefit analyses, suggesting a need for revised methods in environmental economics.
Area of Science:
- Environmental Economics
- Behavioral Economics
- Decision Science
Background:
- Long-term discount rates for environmental goods are crucial for cost-benefit analyses.
- A common justification for specific discount rate structures is based on human judgment.
- Previous research suggests discount rates should decrease with longer delays.
Purpose of the Study:
- To investigate the internal consistency of human judgments regarding long-term discount rates.
- To evaluate the reliability of human judgments as a basis for environmental cost-benefit analyses.
Main Methods:
- An experiment was designed to elicit and analyze human judgments on discount rates across varying delay periods.
- Participants' responses were analyzed for consistency in their stated discount rate preferences.
Main Results:
- Experimental findings revealed significant internal inconsistencies in participants' judgments of discount rates.
- These inconsistencies were observed even when considering the same environmental goods across different time horizons.
Conclusions:
- Human judgments on discount rates are not consistently applied, questioning their suitability for determining environmental discount rates.
- The findings highlight potential flaws in using judgment referenda for cost-benefit analyses, necessitating a re-evaluation of current methodologies.
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