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-3

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 of this preliminary technical support document (TSD), the U.S. 

Department of Energy (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 of this TSD, DOE used data from the Federal 

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

2007, and 2010 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. The bins correspond to all consumers who report a rate between two of the discrete 

levels in Table 8C.2.1 (i.e., the 0.0 bin represents all consumers with a rate between 0.0 and 0.5). 

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

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

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

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

Home Equity Credit Card Installment 

Loans Other Residence Other Line of Credit

Rate

(%)

Weight 

(%)

Rate

(%)

Weight 

(%)

Rate

(%)

Weight 

(%)

Rate

(%)

Weight 

(%)

Rate

(%)

Weight 

(%)

0.0 5.3 0.0 5.7 0.0 36.7 0.0 1.6 0.0 3.5

0.5 8.6 0.5 1.1 0.5 1.6 0.5 2.1 0.5 3.7

1.5 10.2 1.5 1.6 1.5 2.4 1.5 6.7 1.5 3.5

2.5 11.8 2.5 2.3 2.5 4.3 2.5 15.5 2.5 5.6

3.5 20.8 3.5 3.2 3.5 3.5 3.5 18.5 3.5 5.2

4.5 21.4 4.5 4.4 4.5 4.4 4.5 19.2 4.5 11.6

5.5 14.0 5.5 5.9 5.5 5.2 5.5 16.1 5.5 10.7

6.5 3.4 6.5 6.5 6.5 6.4 6.5 10.4 6.5 8.3

7.5 2.5 7.5 3.2 7.5 2.6 7.5 4.3 7.5 4.8

8.5 0.3 8.5 6.6 8.5 3.6 8.5 2.8 8.5 10.1

9.5 0.7 9.5 5.9 9.5 2.5 9.5 0.8 9.5 6.4

10.5 0.0 10.5 5.7 10.5 3.2 10.5 0.4 10.5 4.5

11.5 0.2 11.5 5.7 11.5 1.3 11.5 0.4 11.5 5.6

12.5 0.2 12.5 4.5 12.5 2.2 12.5 0.3 12.5 3.9

13.5 0.2 13.5 4.6 13.5 1.6 13.5 0.1 13.5 1.4

14.5 0.2 14.5 11.6 14.5 4.7 14.5 0.3 14.5 4.1

15.5 0.1 15.5 8.4 15.5 2.8 15.5 0.2 15.5 2.5

16.5 0.0 16.5 3.3 16.5 1.8 16.5 0.1 16.5 1.0

17.5 0.0 17.5 3.9 17.5 2.2 17.5 0.1 17.5 0.4

18.5 2.0 18.5 1.5 18.5 0.0 18.5 1.1

19.5 1.2 19.5 1.2 19.5 0.0 19.5 0.6

20.5 0.8 20.5 1.0 20.5 0.0 20.5 0.5

21.5 0.5 21.5 1.1 21.5 0.0 21.5 0.6

22.5 0.3 22.5 0.4 22.5 0.0 22.5 0.3

23.5 0.2 23.5 0.1 23.5 0.0

24.5 0.4 24.5 0.8 24.5 0.1

25.5 0.3 25.5 0.0

26.5 0.0 26.5 0.0

27.5 0.0 27.5 0.0

28.5 0.0 28.5 0.1

29.5 0.0 29.5 0.0

30.5 0.0 30.5 0.0

31.5 0.0 31.5 0.0

32.5 0.0 32.5 0.0

33.5 0.0 33.5 0.0

34.5 0.0 34.5 0.0

35.5 0.0 35.5 0.1

36.5 0.0 36.5 0.0

37.5 0.0

38.5 0.0

39.5 0.5
8C-3

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 of this TSD, DOE used data from the 

various 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

(%)

1982 - 6.0 8.0 7.2 13.4 11.3

1983 - 5.9 8.4 8.6 18.5 15.2

1984 5.5 6.1 7.9 8.0 1.8 3.9

1985 5.3 4.5 7.5 7.5 26.7 20.3

1986 6.0 4.6 7.2 7.0 16.3 13.2

1987 3.3 3.2 5.7 5.5 2.1 3.2

1988 3.1 3.6 5.3 5.4 11.9 9.7

1989 3.0 4.1 4.0 4.2 25.4 18.4

1990 2.4 2.6 3.5 3.7 -8.0 -4.1

1991 2.7 1.6 4.2 4.4 25.0 18.1

1992 2.1 0.7 4.9 5.0 4.4 4.6

1993 1.1 0.3 3.9 4.1 6.8 5.9

1994 1.3 2.3 5.0 5.3 -1.2 1.0

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 20.9

1998 3.4 3.8 4.8 4.9 26.4 19.2

1999 2.3 3.2 4.5 4.7 18.3 13.8

2000 1.7 3.1 3.8 4.1 -12.0 -6.6

2001 1.8 0.8 3.5 4.1 -14.3 -8.2

2002 1.3 0.2 4.6 4.8 -23.2 -13.8

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 1.9 1.8 1.4 1.5

2006 1.1 2.0 2.1 2.3 12.0 8.8

2007 2.0 2.3 2.5 2.6 2.6 2.6

2008 0.2 -0.7 2.1 1.7 -38.9 -25.4

2009 3.6 1.2 6.1 5.7 26.4 19.5

2010 0.6 -1.2 3.6 3.2 13.0 9.7

2011 -1.0 -2.7 2.3 1.4 -1.1 -0.2

Average 2.1 2.1 4.6 4.6 7.6 6.9

Minimum -1.0 -2.7 1.9 1.4 -38.9 -25.4

Maximum 6.0 6.1 8.4 8.6 33.4 23.8

Std. Dev. 1.7 2.3 1.8 1.8 16.8 11.4