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Time preferences and consumer behavior

Author

Listed:
  • David Bradford

    (University of Georgia)

  • Charles Courtemanche

    (Georgia State University
    NBER (National Bureau of Economic Research))

  • Garth Heutel

    (Georgia State University
    NBER (National Bureau of Economic Research)
    Georgia State University)

  • Patrick McAlvanah

    (Federal Trade Commission)

  • Christopher Ruhm

    (NBER (National Bureau of Economic Research)
    University of Virginia)

Abstract

We investigate the predictive power of survey-elicited time preferences. The discount factor elicited from choice experiments using real payments predicts various health, energy, and financial outcomes, including overall self-reported health, smoking, installing energy-efficient lighting, and credit card balance. Allowing for time-inconsistent preferences, both the long-run and present-bias discount factors (δ and β) are also significantly associated in the expected direction with several outcomes. We consider several hypotheses regarding the strength of the association between discount factors and outcomes, such as salience of the outcome or liquidity constraints.

Suggested Citation

  • David Bradford & Charles Courtemanche & Garth Heutel & Patrick McAlvanah & Christopher Ruhm, 2017. "Time preferences and consumer behavior," Journal of Risk and Uncertainty, Springer, vol. 55(2), pages 119-145, December.
  • Handle: RePEc:kap:jrisku:v:55:y:2017:i:2:d:10.1007_s11166-018-9272-8
    DOI: 10.1007/s11166-018-9272-8
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    More about this item

    Keywords

    Time preferences; Time-inconsistency; Health; Energy; Risk and time; Discounting; Present bias;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I10 - Health, Education, and Welfare - - Health - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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