Personal Discount Rates: Evidence from the Tobacco Buyout Program
32 Pages Posted: 3 Jan 2008
Date Written: December 20, 2007
Abstract
The tobacco buyout program affected a number of southern states, including Kentucky, providing a unique opportunity to study how individuals actually make choices involving large sums of money. This natural experiment, allowed us to measure the personal discount rates for Kentucky tobacco farmers, who are heterogeneous in terms of age, education, income, and other economic and non-economic factors. Results of our analysis suggest that personal characteristics, such as confidence, experienced interruptions in the regular family routine, defensive avoidance and attitude toward various sources of information, not an individual's demographic profile, influence the personal discount rate.
Keywords: personal discount rate, tobacco buyout
JEL Classification: D10, D90
Suggested Citation: Suggested Citation
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