Valuing Environmental Outcomes: Preferences for Constant or Improving Sequences

Experimental results on individuals' preferences for temporal sequences of environmental outcomes related to air quality and near-shore ocean water quality are compared with preferences for sequences of health and monetary outcomes. Generally, graduate business student participants gave significantly lower ratings to environmental and health sequences (with equal means) that worsened over time, relative to the ratings they gave to sequences that either remained the same or improved over time. This pattern was reversed by the participants when they faced sequences of monetary payments. This preference structure held for both short (5-year) and long (50-year) time horizons, and it was confirmed with choice data. A model proposed by Loewenstein and Prelec for the valuation of sequences of outcomes was applied to the current data set and compared to the traditional discounting model. In all cases, the model that incorporated “Gestalt” features of the sequence (slope and uniformity) performed better than the net present value discounting model at predicting the mean ratings for the sequences in the different domains.