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Does time preference change with age?

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  • David M. Bishai

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Abstract

This study looks at compensating differentials in the National Longitudinal Survey of Youth (NLSY) to derive estimates of the levels of time preference for labor force participants in each of 15 waves of data from 1979 to 1994. With these estimates the evolution of time preference over the life course is described. Future utility among labor force participants appears to be valued more highly by subjects who are older, more schooled, white, or male. Controlling for schooling level, a higher IQ is associated with a preference for more immediate rewards. If social rates of time preference are correlated with individual rates of time preference then population aging could create intergenerational asymmetries in the social rate of time preference. This phenomenon could make the optimal investments of young populations appear selfish to future generations that are older. Copyright Springer-Verlag 2004

Suggested Citation

  • David M. Bishai, 2004. "Does time preference change with age?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(4), pages 583-602, December.
  • Handle: RePEc:spr:jopoec:v:17:y:2004:i:4:p:583-602 DOI: 10.1007/s00148-004-0187-0
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    References listed on IDEAS

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    Cited by:

    1. Irina Grafova, 2007. "Your Money or Your Life: Managing Health, Managing Money," Journal of Family and Economic Issues, Springer, vol. 28(2), pages 285-303, June.
    2. Antoine Bozio & Guy Laroque & Cormac O’Dea, 2017. "Discount rate heterogeneity among older households: a puzzle?," Journal of Population Economics, Springer;European Society for Population Economics, pages 647-680.
    3. Arthur J. Robson & Larry Samuelson, 2009. "The Evolution of Time Preference with Aggregate Uncertainty," American Economic Review, American Economic Association, pages 1925-1953.
    4. Golsteyn, B.H.H. & Grönqvist, H. & Lindahl, L., 2013. "Time preferences and lifetime outcomes," ROA Research Memorandum 019, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    5. Ryan Edwards, 2013. "The cost of uncertain life span," Journal of Population Economics, Springer;European Society for Population Economics, pages 1485-1522.
    6. Jansen, Anika & Pfeifer, Harald & Raecke, Julia, "undated". "Only the brave? Risk and time preferences of decision makers and firms’ investment in worker training," Research Memorandum 004, Maastricht University, Graduate School of Business and Economics (GSBE).
    7. Sjögren, Tomas, 2016. "Age Dependent Discount Rates, Time Inconsistent Behavior and Welfare Measurement," Umeå Economic Studies 934, Umeå University, Department of Economics.
    8. Cyrus Chu, C.Y. & Chien, Hung-Ken & Lee, Ronald D., 2010. "The evolutionary theory of time preferences and intergenerational transfers," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 451-464, December.
    9. Delaney, Liam & Doyle, Orla, 2012. "Socioeconomic differences in early childhood time preferences," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 237-247.
    10. Strulik, Holger & Trimborn, Timo, 2016. "Hyperbolic discounting can be good for your health," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 11/2016, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
    11. Arthur J. Robson & Larry Samuelson, 2009. "The Evolution of Time Preference with Aggregate Uncertainty," American Economic Review, American Economic Association, pages 1925-1953.
    12. Junji Kageyama, 2009. "On the intertemporal allocation of consumption, mortality and life-history strategies," MPIDR Working Papers WP-2009-008, Max Planck Institute for Demographic Research, Rostock, Germany.
    13. Merrouche, Ouarda, 2007. "The Long Term Effect of Education Spending Decentralization on Human Capital in Spain," Working Paper Series 2007:3, Uppsala University, Department of Economics.
    14. Harrell Chesson & Jami Leichliter & Gregory Zimet & Susan Rosenthal & David Bernstein & Kenneth Fife, 2006. "Discount rates and risky sexual behaviors among teenagers and young adults," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 217-230, May.
    15. Federico Perali & Luca Piccoli & Knut R. Wangen, 2015. "An Extended Theory of Rational Addiction," DEA Working Papers 69, Universitat de les Illes Balears, Departament d'Economía Aplicada.
    16. Liam Delaney & Orla Doyle, 2008. "The Early Childhood Determinants Of Time Preferences," Working Papers 200834, Geary Institute, University College Dublin.
    17. Coda Moscarola, Flavia & Migheli, Matteo, 2015. "Educating Children to Save: an Experimental Approach to Financial Education of Pupils in Primary Schools," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201502, University of Turin.
    18. Eric Schniter & Roman M. Sheremeta & Timothy Shields, 2011. "Conflicted Minds: Recalibrational Emotions Following Trust-based Interaction," Working Papers 11-12, Chapman University, Economic Science Institute.
    19. 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.
    20. Junji Kageyama, 2011. "The intertemporal allocation of consumption, time preference, and life-history strategies," Journal of Bioeconomics, Springer, pages 79-95.

    More about this item

    Keywords

    H43; J31; J28; Time preference; compensating differentials; aging;

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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