Year: 2026
Type: article
Abstract: Research concerning far-reaching discounting has mainly focused on looking at possible ranges of interest rates. Far-reaching environmental questions relate to rate of time preference development as well. Our research question is how can concerned citizens internalize their consumption externalities into their decision-making concerning future generations' welfare. Our hypothesis is that this internalization influences current generations' valuation of time. We derive a multiplier form weighing factor for the rate of time preference and show how this factor can make the rate of time preference-based discount factor grow. This effect can be added into current generations' far distance welfare function to internalize the effects which our consumption causes for future generations' welfare. We show how the extended rate of time preference can have similar type of development as the Net Present Value interest rate and it also has features common to sustainable preferences. As far as we know this relationship has not been revealed before.
Source: Journal of Economic Analysis
DOI: 10.58567/jea05040008
Author: Rauli Svento
Institution: University of Oulu
Language: English
Subfield: Management, Monitoring, Policy and Law
Field: Environmental Science
Domain: Physical Sciences
Open Access status: hybrid
OpenAlex ID: W7204101192