How do households value the future? Evidence from property taxes

Hans R. A. Koster, Edward Pinchbeck*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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Despite the near ubiquity of intertemporal 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 spatiotemporal variation in property taxes in England. Our findings imply long-term average net of growth nominal discount rates that are between 3 and 4 percent. The close correspondence to prevailing market interest rates gives little reason to suggest that households misoptimize by materially undervaluing very long-term financial flows in this high-stakes context. (JEL D15, H71, R31)
Original languageEnglish
Pages (from-to)207-239
Number of pages33
JournalAmerican Economic Journal: Economic Policy
Issue number1
Publication statusPublished - 1 Feb 2022


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