8C-i

APPENDIX 8C. RESIDENTIAL DISCOUNT RATE DISTRIBUTIONS 

TABLE OF CONTENTS 

8C.1 INTRODUCTION ...................................................................................................8C-1

8C.2 DISTRIBUTION OF REAL INTEREST RATES FOR CONSUMER DEBT 

CLASSES ................................................................................................................8C-1

8C.3 DISTRIBUTION OF REAL INTEREST RATES FOR FINANCIAL ASSETS....8C-2

LIST OF TABLES 

Table 8C.2.1 Household Debt: Real Interest Rate Distributions......................................8C-2

Table 8C.3.1 Household Assets: Time-Series of Real Interest Rates...............................8C-4
8C-1

APPENDIX 8C. HOUSEHOLD DISCOUNT RATE DISTRIBUTIONS 

8C.1 INTRODUCTION 

As discussed in Chapter 8, DOE characterized real interest rates associated with 

household debt and assets with probability distributions to develop a residential discount rate. 

The sections below provide the probability distributions. 

8C.2 DISTRIBUTION OF REAL INTEREST RATES FOR CONSUMER DEBT 

CLASSES 

Table 8C.2.1 presents weighted distributions of the real effective interest rates for various 

household debt classes. As reported in Chapter 8, DOE used data from the Federal Reserve 

Board’s Survey of Consumer Finances (SCF) in 1989, 1992, 1995, 1998, 2001, 2004, and 2007 

to generate the probability distributions for household debt. The weights associated with each 

binned rate correspond to the share of each value among the surveyed households. DOE 

calculated the rates shown in Table 8C.2.1 by developing a similar table from each of the seven 

SCF surveys. DOE used the average value in each binned rate and then averaged across the 

seven SCF surveys to derive the values shown in Table 8C.2.1. 
8C-2

Table 8C.2.1 Household Debt: Real Interest Rate Distributions 

1st Mortgage Home Equity Credit Card 

Installment 

Loans Other Residence 

Other Line of 

Credit 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

Rate 

(%) 

Weight 

(%) 

0.5 6.9 0.4 10.4 0.0 6.9 0.0 40.2 0.2 15.1 0.1 5.0 

1.6 22.4 1.5 9.8 1.4 2.3 1.4 2.3 1.5 7.1 1.4 3.8 

2.5 32.7 2.6 18.0 2.5 2.4 2.4 4.7 2.5 9.8 2.5 1.6 

3.5 28.4 3.5 30.0 3.5 4.1 3.4 6.2 3.5 17.9 3.5 5.2 

4.4 17.1 4.5 21.0 4.5 5.5 4.5 6.7 4.5 17.4 4.5 7.6 

5.4 5.0 5.4 13.1 5.6 7.6 5.6 7.8 5.5 20.6 5.5 14.4 

6.4 2.3 6.4 5.5 6.7 8.8 6.7 8.8 6.5 14.8 6.7 11.0 

7.4 0.8 7.5 4.2 7.5 5.0 7.5 3.9 7.5 6.9 7.6 6.0 

8.5 0.5 8.5 2.2 8.7 7.5 8.6 4.6 8.6 2.9 8.7 10.5 

9.5 0.2 9.5 1.0 9.6 6.9 9.5 4.3 9.4 1.7 9.5 10.4 

10.5 0.1 10.6 0.6 10.6 6.5 10.6 3.4 10.6 0.4 10.5 7.9 

11.6 0.1 11.8 0.2 11.5 7.3 11.5 2.3 11.6 0.6 11.6 7.4 

12.4 0.1 12.7 0.4 12.6 6.1 12.5 3.1 12.6 0.5 12.5 7.5 

13.5 0.0 13.7 0.1 13.6 5.5 13.5 2.2 14.7 0.5 13.5 2.2 

14.4 0.1 14.7 0.2 14.7 10.9 14.7 4.3 15.7 0.1 14.7 4.6 

16.7 0.0 16.7 0.0 15.6 9.3 15.6 2.0 16.6 0.3 15.6 2.2 

22.9 0.0 17.5 0.0 16.4 6.8 16.5 2.2 17.9 0.1 16.5 3.1 

42.5 0.1 17.6 6.6 17.6 2.2 17.3 1.3 

18.5 2.3 18.5 1.4 18.5 0.7 

19.4 2.9 19.4 0.8 19.1 1.4 

20.5 1.5 20.5 0.9 20.2 1.0 

21.4 0.7 21.5 0.6 21.5 0.8 

22.5 0.4 22.3 0.3 22.1 0.2 

23.6 0.1 23.4 0.3 23.5 0.3 

24.6 0.3 24.6 0.4 25.4 0.4 

25.5 0.4 25.3 0.3 54.1 0.2 

26.3 0.2 26.6 0.0 

27.3 0.0 27.8 0.1 

28.4 0.1 28.5 0.0 

29.3 0.0 29.3 0.1 

36.9 0.0 34.1 0.1 

36.1 0.0 

43.6 0.0 

44.3 0.0 

47.2 0.0 

93.5 0.0 

8C.3 DISTRIBUTION OF REAL INTEREST RATES FOR FINANCIAL ASSETS 

Table 8C.3.1 presents the time series of real effective interest rates associated with 

various household asset types. As reported in Chapter 8, DOE used data from the various 
8C-3

sources to generate the probability distributions for each of the asset types identified in Table 

8C.3.1. For each asset, the average, minimum, maximum, and standard deviation are provided. 

DOE developed probability distributions based on the average value and standard deviation. 

Because the use of the standard deviations yields distributions with negative values, DOE 

truncated the lower end of the normal distribution at a discount rate of zero. DOE also truncated 

the higher end of the normal distribution in equal proportion to the truncation at the lower end to 

maintain the average values above in Table 8C.3.1. 
8C-4

Table 8C.3.1 Household Assets: Time-Series of Real Interest Rates 

Year 

Savings 

Accounts 

(%) 

CDs 

6 Months 

(%) 

Treasury 

Savings 

Bonds 

(%) 

Corp AAA 

Bonds 

(%) 

Stocks S&P 

500 

(%) 

Mutual 

Funds 

(%) 

1977 - -0.6 1.2 1.4 -12.7 -8.0 

1978 - 0.9 0.8 1.1 -1.0 -0.4 

1979 - 0.1 -1.9 -1.5 6.4 3.7 

1980 - -0.5 -2.0 -1.4 16.1 10.1 

1981 - 5.0 2.8 3.5 -13.6 -8.1 

1982 - 6.0 6.2 7.2 13.4 11.0 

1983 - 5.9 7.7 8.6 18.5 14.9 

1984 5.5 6.1 7.8 8.0 1.8 3.8 

1985 5.4 4.5 7.0 7.5 26.7 20.1 

1986 6.0 4.6 5.8 7.0 16.3 12.8 

1987 3.3 3.2 4.8 5.5 2.1 3.0 

1988 3.1 3.6 4.6 5.4 11.9 9.5 

1989 3.0 4.1 3.5 4.2 25.4 18.1 

1990 2.4 2.6 3.0 3.7 -8.0 -4.3 

1991 2.7 1.6 3.8 4.4 25.0 17.9 

1992 2.1 0.7 4.5 5.0 4.4 4.4 

1993 1.1 0.3 3.5 4.1 6.8 5.7 

1994 1.3 2.3 4.7 5.3 -1.2 0.8 

1995 2.2 3.1 3.9 4.6 33.4 23.6 

1996 2.0 2.4 3.6 4.3 20.3 14.7 

1997 2.7 3.4 4.2 4.9 28.9 20.7 

1998 3.4 3.8 4.0 4.9 26.4 18.9 

1999 2.3 3.2 3.6 4.7 18.3 13.4 

2000 1.7 3.1 2.5 4.1 -12.0 -7.2 

2001 1.8 0.8 2.6 4.1 -14.3 -8.7 

2002 1.3 0.2 3.8 4.8 -23.2 -14.2 

2003 -0.2 -1.1 2.6 3.3 25.6 17.9 

2004 -0.7 -0.9 2.3 2.9 7.8 6.0 

2005 -0.6 0.3 1.2 1.8 1.4 1.3 

2006 0.8 2.0 1.6 2.3 12.0 8.6 

2007 1.9 2.3 1.9 2.6 2.6 2.4 

2008 0.2 -0.7 0.4 1.7 -38.9 -25.8 

Average 2.2 2.3 3.3 4.1 7.1 5.8 

Minimum -0.7 -1.1 -2.0 -1.5 -38.9 -25.8 

Maximum 6.0 6.1 7.8 8.6 33.4 23.6 

Std. Dev. 1.7 2.1 2.3 2.3 16.8 11.5