View Full Version : What is your personal discount rate

12-21-2006, 01:28 AM
What is your personal discount rate? Just wondering about the preferences of Econ applicants. How much more utility would you have to be given in one year to forgoe a unit of utility today? And I know it depends, but you can average.

By the way, whatever anyone says, post application season is just completely boring.

This was originally phrased in dollar terms but it works better this way. Sorry to the one other person who answered before I changed it. This was inspired by blog post saying everyone should have a discount of zero.

12-21-2006, 02:18 AM
How much more utility would you have to be given in one year to forgoe a unit of utility today?

Are we talking government, agency, or corporate debt? If corporate debt, what's the bond rating? ;)
If government, I'd go with 1-5%. Agency, probably the same thing. If corporate, I'd say something a little more aggressive, like 3-8%.

Sorry, can't help but think from a finance perspective on this one.

Edit: haha! just saw the answer for <0% :)

12-21-2006, 02:26 AM
Yea, I guess this question can be interpreted in like 1000 different ways. I wanted to see if anyone actually cared equally about consumption or utility next year as today.

I originally phrased it in dollar terms, but then I figured: if you can earn a 2% real return in TIPS with little risk then no one would answer zero. Still not sure what the proper question would be. I didn't want the finance answer but I could see how the question may still lean in that direction. Then again, a years return minus taxes and inflation would still put you in the lowest positive category (assuming money market or 1 year bonds)

It think its interesting to see people with really high discount rates. They of course should be borrowing quite a bit more than they are right now. Is this a problem with debt markets?

<0% could make sense if you value happiness in the future more than today.