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The Shape of Temptation: Implications for the Economic Lives of the Poor

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  • Abhijit Banerjee

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  • Sendhil Mullainathan

Abstract

This paper argues that the relation between temptations and the level of consumption plays a key role in explaining the observed behaviors of the poor. Temptation goods are defined to be the set of goods that gen- erate positive utility for the self that consumes them, but not for any previous self that anticipates that they will be consumed in the future.

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Bibliographic Info

Paper provided by eSocialSciences in its series Working Papers with number id:2484.

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Date of creation: May 2010
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Handle: RePEc:ess:wpaper:id:2484

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Keywords: consumption; poor; temptation goods; interest rates; investment; savings; borrowing; risk-behavior; Euler inequality;

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References

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