Individual discount rates forecast county-level unemployment change

Abstract

We use a national survey to estimate individuals' discount rates for job creation in the community and test whether impatience for jobs is associated county-level unemployment change outcomes in subsequent years. Our results suggest that impatience for jobs is a possible forecast variable for future modelling efforts. To explore whether the impatience effect is general or simply limited to attitudes about local job creation, the same survey asked about discount rates for local amenity development and personal financial windfall. We find that job growth discount rates perform best for forecasting.

Research note: Age, retirement, and intertemporal resource decision ability

“…FEs for year control for any secular trends may have affected responses over the three survey waves. Following Loveridge and Komarek (2016), the analysis also included change in county unemployment in the month following the survey 1 . A jobs scenario in a high unemployment trending location might cause individuals to focus their attention on the jobs computation more than for the other two types of benefits.…”

“…1 1 Loveridge and Komarek (2016) indicate two potential interpretation of their empirical findings of the association between future county‐level unemployment and individual discount rates: (a) an individual's attitude could be influenced by trends in the community, and (b) respondents may sense that their local economy is able to perform differently in some way and are impatient for that to occur, and that local impatience is associated with the future different performance. They note that regardless of the cause, the empirical association between future unemployment and individual discount rates remains. …”