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How do households value the future? Evidence from property taxes

Koster, Hans R. A. and Pinchbeck, Edward W. (2018) How do households value the future? Evidence from property taxes. CEP Discussion Papers (CEPDP1571). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

Despite the near ubiquity of inter-temporal choice, there is little consensus on the rate at which individuals trade present and future costs and benefits. We contribute to this debate by estimating discount rates from extensive data on housing transactions and spatio-temporal variation in property taxes in England. Our findings imply long-term average discount rates that are between 3 and 4%. The close correspondence to prevailing market interest rates gives little reason to suggest that households misoptimise by materially undervaluing very long term financial flows in this high stakes context.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2018 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HC Economic History and Conditions
JEL classification: G - Financial Economics > G1 - General Financial Markets > G10 - General
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R30 - General
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 11 Jan 2019 11:48
Last Modified: 05 Apr 2019 23:04
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/91693

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