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Working paper

Estimating the relationship between a rate of time preferences and socio-economic factors in Russia

In order to  achieve  the  goals of  any  social policy,  it is necessary  to select the most effective measures of  government  initiatives.  The response of target groups  to  various social policy measures can be  assessed with the help of  the  individual discount rate. This rate reflects  an individual’s opinion on how to distribute consumption among periods. We start with a definition of individual time preferences. Then we  consider  problems connected with  estimating  the individual discount rate. We examine different socio-economic factors  that  influence  individual intertemporal choice  in Russia  and provide  estimates of individual discount rates.  Necessary data are obtained from a survey from the Yuri Levada Analytical Center  that was conducted in 2011. Valid results are found for most of the hypotheses tested. Our findings suggest that social policy  tools  for different target groups should vary depending on  their  individual  time preferences. It could help to intensify the impact of social programs and to save budget resources through the correct choice of policy measures.