Aversion for early death and the structure of time preference
This papers provides an explanation for time preference: we show that in the case of uncertain lifetime, future consumption should be weighted not only according to survival probability, but also according to a discount factor due to risk aversion with respect to the length of life. When individuals are not risk neutral, this discount factor is generally not exponential. Time inconsistent preferences may therefore appear as a consequence of risk aversion with respect to the length of life. Simulations based on plausible utility for life years and on realistic mortality patterns provide in fact a strong support for hyperbolic discounting.
|Date of creation:||Sep 2001|
|Date of revision:|
|Contact details of provider:|| Postal: INRA-LEA, 48, Boulevard Jourdan, 75014 Paris, France|
Phone: 331 43136364
Fax: 331 43136362
Web page: http://www.inra.fr/Internet/Departements/ESR/UR/lea/index.html
When requesting a correction, please mention this item's handle: RePEc:lea:leawpi:0106. 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: (Madeleine Roux)The email address of this maintainer does not seem to be valid anymore. Please ask Madeleine Roux to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.