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Looking ahead: subjective time perception and individual discounting

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  • Bradford, W. David
  • Dolan, Paul
  • Galizzi, Matteo M.

Abstract

Time discounting is at the heart of economic decision-making. We disentangle hyperbolic discounting from subjective time perception using experimental data from incentive-compatible tests to measure time preferences, and a set of experimental tasks to measure time perception. The two behavioural parameters may be related to two factors that affect how we look ahead to future events. The first is that some component of time preferences reflect hyperbolic discounting. The second factor is that non-constant discounting may also be a reflection of subjective time perception: if people’s perception of time follows a near logarithmic process (as all other physiological perceptions such as heat, sound, and light do) then all existing estimates of individual discounting will be mis-measured and incorrectly suggest “hyperbolic” discounting, even if discounting over subjective time is constant. To test these hypotheses, we empirically estimate the two distinct behavioural parameters using data collected from 178 participants to an experiment conducted at the London School of Economics Behavioural Research Lab. The results support the hypothesis that apparent non-constant discounting is largely a reflection of subjective time perception.

Suggested Citation

  • Bradford, W. David & Dolan, Paul & Galizzi, Matteo M., 2014. "Looking ahead: subjective time perception and individual discounting," LSE Research Online Documents on Economics 60265, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:60265
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    Cited by:

    1. Lemoine, Derek, 2018. "Age-induced acceleration of time: Implications for intertemporal choice," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 143-152.
    2. Michael Spackman, 2017. "Social discounting: the SOC/STP divide," GRI Working Papers 182, Grantham Research Institute on Climate Change and the Environment.

    More about this item

    Keywords

    Time preferences; Time perception; Hyperbolic discounting;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D10 - Microeconomics - - Household Behavior - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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