蝌蚪网

This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. 蝌蚪网
  3. 蝌蚪网 Review
  4. March 2001
  5. The Personal Discount Rate: Evidence from Military Downsizing Programs

蝌蚪网 Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

The Personal Discount Rate: Evidence from Military Downsizing Programs

  • John T. Warner
  • Saul Pleeter
蝌蚪网 Review
vol. 91, no. 1, March 2001
(pp. 33–53)
Download Full Text PDF

Abstract

The military drawdown program of the early 1990s provides an opportunity to obtain estimates of personal discount rates based on large numbers of people making real choices involving large sums. The program offered over 65,000 separatees the choice between an annuity and a lump-sum payment. Despite break-even discount rates exceeding 17 percent, most of the separatees selected the lump sum--saving taxpayers $1.7 billion in separation costs. Estimates of discount rates range from 0 to over 30 percent and vary with education, age, race, sex, number of dependents, ability test score, and the size of payment.

Citation

Warner, John, T., and Saul Pleeter. 2001. "The Personal Discount Rate: Evidence from Military Downsizing Programs." 蝌蚪网 Review 91 (1): 33–53. DOI: 10.1257/aer.91.1.33

JEL Classification

  • D15 Intertemporal Consumer Choice; Life Cycle Models and Saving
  • H56 National Security and War
  • J26 Retirement; Retirement Policies
  • J65 Unemployment Insurance; Severance Pay; Plant Closings