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Is there a daily discount rate? Evidence from the food stamp nutrition cycle

  • Shapiro, Jesse M.

A central prediction of the quasi-hyperbolic model of time preference is that consumers will be impatient over short-run tradeoffs. I present the first nonlaboratory test of this implication using data on the nutritional intake of food stamp recipients. Caloric intake declines by 10 to 15 percent over the 30-day period following receipt of food stamps, implying a significant preference for immediate consumption. Resulting estimates of the daily discount rate are inconsistent with any reasonable calibration of an exponential discounting model. The data support an explanation based on time preference and reject several alternative explanations, including high elasticities of intertemporal substitution, strategic interactions and food depreciation.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 89 (2005)
Issue (Month): 2-3 (February)
Pages: 303-325

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Handle: RePEc:eee:pubeco:v:89:y:2005:i:2-3:p:303-325
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