8D-i 

APPENDIX 8D. RESIDENTIAL DISCOUNT RATE DISTRIBUTIONS

TABLE OF CONTENTS

8D.1 INTRODUCTION ................................................................................................. 8D-1

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

CLASSES .............................................................................................................. 8D-1

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

LIST OF TABLES

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

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

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8D-1 

APPENDIX 8D. RESIDENTIAL DISCOUNT RATE DISTRIBUTIONS

8D.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. 

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

CLASSES

Table 8D.2.1 0presents 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 8D.2.1 by developing a similar table from each of the 

seven SCF surveys. DOE used each year’s respective weighting for the bins and then averaged 

across the seven SCF surveys to derive the values shown in Table 8D.2.1. 

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8D-2 

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

Rate

%

Home Equity

%

Credit Card

%

Installment Loans

%

Other Residence

%

Other Line of Credit

%

0.0 2.3 5.2 37.1 1.4 1.9 

0.5 6.2 1.0 1.4 1.5 2.8 

1.5 7.9 1.5 2.5 4.6 3.0 

2.5 12.1 2.3 4.3 13.1 4.4 

3.5 22.8 3.3 3.8 18.0 5.0 

4.5 24.2 4.2 4.5 20.7 12.3 

5.5 15.9 5.9 5.3 18.3 11.3 

6.5 3.8 6.6 6.6 11.8 8.9 

7.5 2.9 3.1 2.6 4.8 5.1 

8.5 0.4 6.4 3.6 3.0 10.8 

9.5 0.8 5.8 2.8 0.8 6.9 

10.5 0.0 5.9 2.8 0.4 4.9 

11.5 0.2 5.7 1.4 0.5 6.3 

12.5 0.2 4.8 2.5 0.4 4.4 

13.5 0.0 4.8 1.9 0.1 1.1 

14.5 0.1 12.3 4.6 0.4 4.2 

15.5 9.0 2.9 0.2 2.7 

16.5 3.4 1.5 0.1 0.7 

17.5 3.9 2.1 0.1 0.3 

18.5 1.9 1.5 1.2 

19.5 1.1 0.7 0.7 

20.5 0.7 0.9 0.0 

21.5 0.3 1.0 0.6 

22.5 0.2 0.4 0.3 

23.5 0.1 0.1 0.0

24.5 0.3 0.7 0.1 

25.5 0.1 0.0

26.5 0.0

27.5 0.1 

28.5 0.1 

29.5 0.0

30.5 0.0 

31.5 0.0

32.5 0.0

33.5 0.0 

34.5 0.0

35.5 0.1 

36.5 0.0

37.5 0.0

38.5 0.0

39.5 0.4 

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

Table 8D.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 various sources to 

generate the probability distributions for each of the asset types identified in Table 8D.3.1. For 

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8D-3 

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 8D.3.1. 

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8D-4 

Table 8D.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

%

1979 - 0.1 -2.8 -1.5 6.4 3.4

1980 - -0.5 -2.3 -1.4 16.1 10.0

1981 - 5.0 3.7 3.5 -13.6 -7.8

1982 - 6.0 8.0 7.2 13.4 11.6

1983 - 5.9 8.3 8.6 18.5 15.1

1984 5.5 6.1 7.9 8.0 1.8 3.8

1985 5.4 4.5 7.5 7.5 26.7 20.3

1986 6.0 4.6 7.2 7.0 16.3 13.3

1987 3.3 3.2 5.7 5.5 2.1 3.3

1988 3.1 3.6 5.3 5.4 11.9 9.7

1989 3.0 4.1 4.0 4.2 25.4 18.3

1990 2.4 2.6 3.5 3.7 -8.0 -4.2

1991 2.7 1.6 4.2 4.4 25.0 18.1

1992 2.1 0.7 4.9 5.0 4.4 4.5

1993 1.1 0.3 3.9 4.1 6.8 5.8

1994 1.3 2.3 5.1 5.3 -1.2 0.9

1995 2.2 3.1 4.5 4.6 33.4 23.8

1996 2.0 2.4 4.2 4.3 20.3 14.9

1997 2.7 3.4 4.6 4.9 28.9 20.8

1998 3.4 3.8 4.8 4.9 26.4 19.2

1999 2.3 3.2 4.6 4.7 18.3 13.7

2000 1.7 3.1 3.8 4.1 -12.0 -6.7

2001 1.8 0.8 3.5 4.1 -14.3 -8.4

2002 1.3 0.2 4.6 4.8 -23.2 -13.9

2003 -0.2 -1.1 3.4 3.3 25.5 18.1

2004 -0.7 -0.9 3.0 2.9 7.9 6.2

2005 -0.2 0.3 2.0 1.8 1.4 1.6

2006 1.1 2.0 2.1 2.3 12.0 8.7

2007 2.0 2.3 2.5 2.6 2.6 2.5

2008 0.2 -0.7 2.1 1.7 -38.9 -25.3

2009 3.6 1.2 6.1 5.7 26.4 19.6

Average 2.3 2.4 4.2 4.3 8.6 7.1

Minimum -0.7 -1.1 -2.8 -1.5 -38.9 -25.3

Maximum 6.0 6.1 8.3 8.6 33.4 23.8

Std. Dev. 1.7 2.1 2.5 2.3 16.9 11.5

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