Some Empirical Evidence on Offender Time Discount Rates


  • The authors gratefully acknowledge the comments and suggestions of two anonymous referees and colleagues from Deakin University, in particular Dr. Samarth Vaidya and Associate Professor Phillip Hone. Any errors or omissions are the sole responsibility of the authors.

Andrew Torre, School of Accounting, Economics and Finance, Faculty of Business and Law, Deakin University, 221 Burwood Highway, Burwood, VIC 3125, Australia. Email:


The conventional wisdom is that offenders have very high discount rates not only with respect to income and fines but also with respect to time incarcerated. These rates are difficult to measure objectively and the usual approach is to ask subjects hypothetical questions and infer time preference from their answers. In this article, we propose estimating rates at which offenders discount time incarcerated by specifying their equilibrium plea, defined as the discount rate, which equates the time and expected time spent in jail following a guilty plea and a trial. Offenders are assumed to exhibit positive time preference and discount time spent in jail at a constant rate. Our choice of sample is interesting because the offenders are not on bail, punishment is not delayed and the offences are planned therefore conforming to Becker’s model of the decision to commit a crime. Contrary to the discussion in the literature, we do not find evidence of consistently high time discount rates, and therefore cannot unequivocally infer that the prison experience always results in low levels of specific deterrence.