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Time preference and the importance of saving for retirement

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  • Finke, Michael S.
  • Huston, Sandra J.

Abstract

This study models the importance respondents place on saving for retirement as a function of time preference using a sample of 6812 undergraduate and graduate students. Individual time preference is measured by comparing dollar values over time and through a combination of intertemporal behaviors that may be the most theoretically appropriate measurement of the discount rate for utility over time. Results show strong correlations among decision making domains that involve time discounting. Time preference measured by comparing dollar amounts across time proves a much weaker predictor than a combination of intertemporal behaviors measured either as a linear scale or as factors. In multivariate models, a factor of intertemporal preventive health behaviors is a stronger predictor of the importance of saving for retirement than all other explanatory variables including age, race, parental income, gender, GPA, and college major.

Suggested Citation

  • Finke, Michael S. & Huston, Sandra J., 2013. "Time preference and the importance of saving for retirement," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 23-34.
  • Handle: RePEc:eee:jeborg:v:89:y:2013:i:c:p:23-34
    DOI: 10.1016/j.jebo.2013.03.004
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Robert L. Clark & Robert G. Hammond & Christelle Khalaf & Melinda Sandler Morrill, 2017. "Planning for Retirement? The Importance of Time Preferences," NBER Working Papers 23501, National Bureau of Economic Research, Inc.
    2. Alan, Sule & Ertac, Seda, 2015. "Patience, self-control and the demand for commitment: Evidence from a large-scale field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 115(C), pages 111-122.
    3. Koehler, Derek J. & Langstaff, Jesse & Liu, Wu-Qi, 2015. "A simulated financial savings task for studying consumption and retirement decision making," Journal of Economic Psychology, Elsevier, vol. 46(C), pages 89-97.
    4. repec:kap:jfamec:v:38:y:2017:i:2:d:10.1007_s10834-016-9513-4 is not listed on IDEAS
    5. Martin F. Lueken & Michael Podgursky, 2016. "Determinants of Cashing Out: A Behavioral Analysis of Refund Claimants and Annuitants in the Illinois Teachers Retirement System," Working Papers 1605, Department of Economics, University of Missouri.
    6. Sule Alan & Seda Ertac, 2015. "Good Things Come to Those Who (Are Taught How to) Wait: Results from a Randomized Educational Intervention on Time Preference," Working Papers 2015-003, Human Capital and Economic Opportunity Working Group.

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