Abstract
Discounting is a manifestation of behavioral impulsivity, which is closely related to self-regulation processes. The decision-making process for intertemporal choices is governed by the inhibition of impulses, which can influence both risk and time-related attitudes. This paper utilizes self-reported measures of risk, impatience, and impulsivity attitudes to examine their impact on the implicit discount rate used when weighing the current purchase cost against future energy savings of appliances. It analyzes and tests the interplay between these attitudes using specific functional forms and causal models. The results highlight the role of risk, impatience and impulsivity on the discount rate and the biases that arise from omitting impulsive attitudes. In addition, other factors such as environmental and social preferences, attitudes, and financial constraints contribute to the implicit discount rate.
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Data generated by the survey are available upon request to the author.
Notes
Self-control is a top-down or Type II deliberate process which entails (a) a conflicting dilemma of deciding between a concrete-proximal goal and an abstract-distal goal and/or (b) overcoming a stimulus-driven response to execute a goal-relevant response (Nigg, 2017). It is a specific self-regulation case where goals are competing (Fujita, 2011).
Smaller delayed rewards are discounted more steeply than larger delayed rewards. Smaller probabilistic rewards are less steeply discounted than larger probabilistic rewards.
Households which had made a purchase more than 4 years earlier were not included.
Houston (1983) used a “very long useful life” to define lifetime, a hypothetical device, total costs of purchase and installation. Here the lifetime was held constant at 10 years. This figure coincides with the central values for the expected duration of a washing machine for households, as per Table 10.
The internal rate of return is calculated with R software using the FinCal package.
No significant multicollinearity was observed in this model. However, there is a possibility of collinearity occurring among the variables of risk, impatience, and impulsivity, as they may be influenced by other variables in the model. Nevertheless, this effect is not substantial, as indicated by the results of the variance inflation test presented in Table 12 in the appendix.
No sample selection bias was detected in the model based on a two-step Heckman procedure.
See Table 11—Models M1 B and M1 C.
The introduction of a cross term between environmental worries and installation of EE windows was not conclusive.
Income has been measured as a self-reported evaluation of relative income (Table 8). The absolute income presents greater missing values and had no significant effect in this model.
The magnitude effect is observed for both delay discounting and probabilistic discounting but operates differently. Smaller delayed amounts are discounted more steeply than larger delayed amounts. Smaller probabilistic amounts are discounted less steeply than larger probabilistic amounts (Green and Myerson, 2004).
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Acknowledgements
This research has received funding from the European Union Horizon 2020 program under grant agreement Nº 723741—CONSEED. It is also supported by María de Maeztu Excellence Unit 2023-2027 (Ref. CEX2021-001201-M), funded by MCIN/AEI/10.13039/501100011033; and by the Basque Government through the BERC 2022-2025 program.
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Appendices
Appendices
A. Description of variables and descriptive statistics
The description of the variable in Table 8 includes its name in the table of results, its description, and format.
Descriptive statistics
Tables 9 and 10 present the descriptive statistics of the variables of the models.
B. Robustness of the model: independence with inclusion of factors
To check how the size and significance of the marginal effects change, different determinants of the IDR are successively included in the IDR equation, as per models 1 to 7 in Table 11. Results show that the IDR model tends to be stable with the inclusion of other factors, especially when impulsivity is included.
Model 1A–C restrict the factors to risk, impatience, and impulsivity attitudes. Model 2 adds social preferences, attitudes, and comparison. Model 3 adds informational factors to the previous model. Model 4 further adds financial and economic factors. Model 5 tests only individual characteristics, while Model 6 adds financial and economic factors to the previous model. Model 7 represents the complete model presented in the main text.
The model specification remains relatively stable when other parameters are included. The inclusion of impulsivity in Model 1C makes the risk variable significant. The effects of age, gender, and life satisfaction disappear when other variables are included (Model 5 vs. Models 6–7).
C. Tests of multicollinearity
Table 12 presents the results of the multicollinearity test conducted using the variance inflation factor.
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Foudi, S. Are risk attitude, impatience, and impulsivity related to the individual discount rate? Evidence from energy-efficient durable goods. Theory Decis (2024). https://doi.org/10.1007/s11238-023-09961-9
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DOI: https://doi.org/10.1007/s11238-023-09961-9