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Hypothetical Intertemporal Consumption Choices

  • Arie Kapteyn

    (Tilburg University)

  • Federica Teppa


The paper extends and replicates part of the analysis by Barsky et al. (1997), which exploits hypothetical choices among different consumption streams to infer intertemporal substitution elasticities and rates of time preference. We use a new and much larger dataset than Barsky et al. Furthermore, we estimate structural models of intertemporal choice, while parameterising the parameters of interest as a function of relevant individual characteristics. We also consider "behavioural" extensions, like habit formation. Models with habit formation appear to be superior to models with intertemporally additive preferences. Copyright Royal Economic Society 2003

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Article provided by Royal Economic Society in its journal Economic Journal.

Volume (Year): 113 (2003)
Issue (Month): 486 (March)
Pages: C140-C152

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Handle: RePEc:ecj:econjl:v:113:y:2003:i:486:p:c140-c152
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  17. Peleg, Bezalel & Yaari, Menahem E, 1973. "On the Existence of a Consistent Course of Action when Tastes are Changing," Review of Economic Studies, Wiley Blackwell, vol. 40(3), pages 391-401, July.
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