Estimating the social rate of time preference for changes in mortality risk; a contingent valuation approach

The objective of this study is to determine the appropriateness of using surveys to estimate the social rate of time preference for a change in mortality risk. Three measures of the appropriateness were used: the degree of bias evident in survey results, the reliability of the survey data as measured by context validity, and a comparison with the results of previous studies. A survey was designed to estimate the social rate of time preference (SRTP) for a reduction in mortality risk resulting from the removal of toxics from the water supply. The survey design was pretested and then face-to-face surveys were conducted with 100 residents of Arlington, Virginia. The median social rate of time preference was 0.956. Bias was significant and generally biased SRTP upward. However, it was not overwhelming suggesting biases can be controlled for. A model of determinants of SRTP was estimated and was significant lending validity to the reliability of the survey data. Finally, the results are comparable to those of the only previous study estimating SRTP for changes in mortality risk. It is concluded that face-to-face surveys are effective in revealing the social rate of time preference for a well-defined benefit stream though the potential for biased responses is not insignificant.