Stability of Time Preferences
AbstractIndividuals frequently face intertemporal decisions. For the purposes of economic analysis, the preference parameters assumed to govern these decisions are generally considered to be stable economic primitives. However, evidence on the stability of time preferences is notably lacking. In a large field study conducted over two years with about 1,400 individuals, time preferences are elicited using incentivized choice experiments. The aggregate distributions of discount factors and the proportion of present-biased individuals are found to be unchanged over the two years. At the individual level, the one year correlations in measured time preference parameters are found to be high by existing standards, though some individuals change their intertemporal choices potentially indicating unstable preferences. By linking time preference measures to tax return data, we show that identified instability is uncorrelated with socio-demographics and changes to income, future liquidity, employment and family composition.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4756.
Length: 44 pages
Date of creation: Feb 2010
Date of revision:
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Find related papers by JEL classification:
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-06 (All new papers)
- NEP-CBE-2010-03-06 (Cognitive & Behavioural Economics)
- NEP-EVO-2010-03-06 (Evolutionary Economics)
- NEP-EXP-2010-03-06 (Experimental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dohmen, Thomas J & Falk, Armin & Huffman, David & Schupp, Jürgen & Sunde, Uwe & Wagner, Gert Georg, 2006.
"Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey,"
CEPR Discussion Papers
5517, C.E.P.R. Discussion Papers.
- Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," Discussion Papers of DIW Berlin 511, DIW Berlin, German Institute for Economic Research.
- Dohmen, Thomas & Falk, Armin & Huffman, David B. & Sunde, Uwe & Schupp, Jürgen & Wagner, Gert G., 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," IZA Discussion Papers 1730, Institute for the Study of Labor (IZA).
- Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Juergen Schupp & Gert Wagner, 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," Working Papers 2096, The Field Experiments Website.
- Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jurgen Schupp & Gert Wagner, 2005. "Individual risk attitudes: New evidence from a large, representative, experimentally-validated survey," Framed Field Experiments 00140, The Field Experiments Website.
- Nava Ashraf & Dean S. Karlan & Wesley Yin, 2005.
"Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines,"
917, Economic Growth Center, Yale University.
- Nava Ashraf & Dean Karlan & Wesley Yin, 2006. "Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 635-672, May.
- Nava Ashaf & Dean Karlan & Wesley Yin, 2004. "Tying odysseus to the mast: Evidence from a commitment savings product in the philippines," Natural Field Experiments 00206, The Field Experiments Website.
- Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-71, March.
- Burks, Stephen V. & Carpenter, Jeffrey P. & Götte, Lorenz & Rustichini, Aldo, 2008. "Cognitive Skills Explain Economic Preferences, Strategic Behavior, and Job Attachment," IZA Discussion Papers 3609, Institute for the Study of Labor (IZA).
- O'Donoghue, Ted & Rabin, Matthew, 1997.
"Doing It Now or Later,"
Department of Economics, Working Paper Series
qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Ted O'Donoghue & Matthew Rabin, 1996. "Doing It Now or Later," Discussion Papers 1172, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Ted O'Donoghue and Matthew Rabin ., 1997. "Doing It Now or Later," Economics Working Papers 97-253, University of California at Berkeley.
- Daniel J. Benjamin & James J. Choi & A. Joshua Strickland, 2007.
"Social Identity and Preferences,"
NBER Working Papers
13309, National Bureau of Economic Research, Inc.
- Lawrance, Emily C, 1991. "Poverty and the Rate of Time Preference: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 54-77, February.
- Horowitz, John K., 1992. "A test of intertemporal consistency," Journal of Economic Behavior & Organization, Elsevier, vol. 17(1), pages 171-182, January.
- Glenn Harrison & Morten Lau & Elisabet Rutstrom, 2005. "Dynamic consistency in denmark: A longitudinal field experiment," Artefactual Field Experiments 00060, The Field Experiments Website.
- Laibson, David I., 1997.
"Golden Eggs and Hyperbolic Discounting,"
4481499, Harvard University Department of Economics.
- Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer, vol. 2(2), pages 107-127, December.
- Glenn Harrison & John List, 2004.
Artefactual Field Experiments
00058, The Field Experiments Website.
- Steffen Andersen & Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutström, 2008. "Eliciting Risk and Time Preferences," Econometrica, Econometric Society, vol. 76(3), pages 583-618, 05.
- Matthias Benz & Stephan Meier, 2006.
"Do people behave in experiments as in the field?: evidence from donations,"
06-8, Federal Reserve Bank of Boston.
- Matthias Benz & Stephan Meier, 2008. "Do people behave in experiments as in the field?—evidence from donations," Experimental Economics, Springer, vol. 11(3), pages 268-281, September.
- Matthias Benz & Stephan Meier, . "Do People Behave in Experiments as in the Field? – Evidence from Donations," IEW - Working Papers 248, Institute for Empirical Research in Economics - University of Zurich.
- Glenn Harrison & Morten Lau & Elisabet Rutstrom & Melonie Williams, 2005. "Eliciting risk and time preferences using field experiments: Some methodological issues," Artefactual Field Experiments 00063, The Field Experiments Website.
- Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- IZA Paper: Stability of Time Preferences
by Liam Delaney in Geary Behaviour Centre on 2011-02-28 01:19:00
- Volk, Stefan & Thöni, Christian & Ruigrok, Winfried, 2012.
"Temporal stability and psychological foundations of cooperation preferences,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 81(2), pages 664-676.
- Volk, Stefan & Thoeni, Christian & Ruigrok, Winfried, 2011. "Temporal stability and psychological foundations of cooperation preferences," Economics Working Paper Series 1101, University of St. Gallen, School of Economics and Political Science.
- Charles J. Courtemanche & Garth Heutel & Patrick McAlvanah, 2011.
"Impatience, Incentives, and Obesity,"
NBER Working Papers
17483, National Bureau of Economic Research, Inc.
- Kristopher Gerardi & Lorenz Goette & Stephan Meier, 2010. "Financial literacy and subprime mortgage delinquency: evidence from a survey matched to administrative data," Working Paper 2010-10, Federal Reserve Bank of Atlanta.
- Uschi Backes-Gellner & Yvonne Oswald, 2012. "Learning for a bonus: How financial incentives interact with preferences," Economics of Education Working Paper Series 0079, University of Zurich, Institute for Strategy and Business Economics (ISU).
- Markus Sass & Joachim Weimann, 2012. "The Dynamics of Individual Preferences in Repeated Public Good Experiments," FEMM Working Papers 120002, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.