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Which measures of time preference best predict outcomes: Evidence from a large-scale field experiment

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  • Burks, Stephen
  • Carpenter, Jeffrey
  • Götte, Lorenz
  • Rustichini, Aldo

Abstract

Economists and psychologists have devised numerous instruments to measure time preferences and have generated a rich literature examining the extent to which time preferences predict important outcomes; however, we still do not know which measures work best. With the help of a large sample of non-student participants and administrative data on outcomes, we gather four different time preference measures and test the extent to which they predict both on their own and when they are all forced to compete head-to-head. Our results suggest that the now familiar (β, δ) formulation of present bias and exponential discounting predicts best, especially when both parameters are used.

Suggested Citation

  • Burks, Stephen & Carpenter, Jeffrey & Götte, Lorenz & Rustichini, Aldo, 2012. "Which measures of time preference best predict outcomes: Evidence from a large-scale field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 308-320.
  • Handle: RePEc:eee:jeborg:v:84:y:2012:i:1:p:308-320 DOI: 10.1016/j.jebo.2012.03.012
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    More about this item

    Keywords

    Time preference; Impatience; Discounting; Present bias; Field experiment;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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