Center for Policy Research
Property Tax Web Series
How Do Households Value the Future? Evidence from Property Taxes
Hans R.A. Koster and Edward W. Pinchbeck
November 2022
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Abstract
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.
This paper was presented by Hans Koster (Vrije Universiteit Amsterdam) on November 4, 2022 as part of the 2022-2023 Syracuse-Chicago Webinar Series on Property Tax Administration and Design. Michael Kumhof (Bank of England) was the discussant for this presentation. Kumhof comments on Koster's "How do Households Value the Future? Evidence from Property Taxes."
This Syracuse-Chicago Webinar Series on Property Tax Administration and Design aims to gather insight and scholarship through domestic and international comparative studies with common threads to help reform and improve property tax administration and design in the U.S. and other countries facing similar problems.
For questions about the webinars, please contact Zia Jackson. For questions about this paper, please contact the author or authors.