Self-control and savings
We reconsider the well-established paradigm of a rational individual's choice of a consumption schedule, building on the idea that human beings devote resources to withstand their desire for immediate consumption, i.e. to become more patient, thereby making less remote the pleasure derived from deferred consumption. We construct an infinite-horizon model of a small open economy, in which individuals can accumulate a stock of personal capital that reduces the discount on future consumption. Personal capital captures the effect of a conumer's past experience and choices on his future utilities. Our main results are: i) when individuals are heterogenous with respect to ability to become patient all individuals exhibit the same rate of time preference in the long run; ii) effort is rewarded in the long run to the extent that individuals who need to make more effort to become patient are wealthier and enjoy a higher level of utility bin the steady state. The latter result stems from the complementarity between personal capital and deferred consumption. JEL Classification: E13
|Date of creation:||Jan 2003|
|Date of revision:|
|Contact details of provider:|| Postal: 60640 Frankfurt am Main, Germany|
Phone: +49 69 1344 0
Fax: +49 69 1344 6000
Web page: http://www.ecb.europa.eu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vidal, Jean-Pierre, 2000. "Capital Mobility in a Dynastic Framework," Oxford Economic Papers, Oxford University Press, vol. 52(3), pages 606-25, July.
- Gary S. Becker & Robert J. Barro, 1986.
"A Reformulation of the Economic Theory of Fertility,"
NBER Working Papers
1793, National Bureau of Economic Research, Inc.
- Gary S. Becker & Robert J. Barro, 1988. "A Reformulation of the Economic Theory of Fertility," The Quarterly Journal of Economics, Oxford University Press, vol. 103(1), pages 1-25.
- Gary S. Becker & Robert J. Barro, . "A Reformulation of the Economic Theory of Fertility," University of Chicago - Population Research Center 85-11, Chicago - Population Research Center.
- Weil, Philippe, 1987. "Love thy children : Reflections on the Barro debt neutrality theorem," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 377-391, May.
- Philippe Weil, 1987. "Love Thy Children: Reflections on the Barro Debt Neutrality Theorem," Sciences Po publications info:hdl:2441/8711, Sciences Po.
- Andrew B. Abel, .
"Operative Gift and Bequest Motives,"
Rodney L. White Center for Financial Research Working Papers
09-87, Wharton School Rodney L. White Center for Financial Research.
- Andrew B. Abel, 1987. "Operative Gift and Bequest Motives," NBER Working Papers 2331, National Bureau of Economic Research, Inc.
- Andrew B. Abel, . "Operative Gift and Bequest Motives," Rodney L. White Center for Financial Research Working Papers 9-87, Wharton School Rodney L. White Center for Financial Research.
- Debajyoti Chakrabarty, 2000.
"Poverty traps and Growth in a model of Endogenous Time Preference,"
Departmental Working Papers
200018, Rutgers University, Department of Economics.
- Chakrabarty Debajyoti, 2012. "Poverty Traps and Growth in a Model of Endogenous Time Preference," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-35, July.
- Chakrabarty, Debajyoti, 2002. "Poverty traps and growth in a model of endogenous time preference," ZEI Working Papers B 27-2002, University of Bonn, ZEI - Center for European Integration Studies.
- Gary S. Becker, 1974.
"A Theory of Social Interactions,"
NBER Working Papers
0042, National Bureau of Economic Research, Inc.
- Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 41(1), pages 68-95, February.
- Gary S. Becker & Casey B. Mulligan, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 729-758.
- Robert A. Becker, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, Oxford University Press, vol. 95(2), pages 375-382.
- Emmanuel Thibault, 2000. "Existence of equilibrium in an OLG model with production and altruistic preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(3), pages 709-715.
When requesting a correction, please mention this item's handle: RePEc:ecb:ecbwps:20030211. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Official Publications)
If references are entirely missing, you can add them using this form.