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Time Compression

  • Aadland, David
  • Shaffer, Sherrill

Economists have generally ignored the notion that perceived time may differ from clock time. Borrowing from the behavioral psychology literature, we investigate the case of time compression whereby perceived time passes more quickly than actual time. A framework is presented to embed time compression in economic models. We then apply the principle to a standard lifecycle permanent income model with endogenous labor. Time compression provides an alternative explanation of why older individuals, even those without declining labor productivity, may choose to reduce their work effort.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29298.

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Date of creation: 01 Oct 2010
Date of revision:
Handle: RePEc:pra:mprapa:29298
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  1. Dora L. Costa, 1998. "The Evolution of Retirement: An American Economic History, 1880-1990," NBER Books, National Bureau of Economic Research, Inc, number cost98-1, December.
  2. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, December.
  3. Ted O'Donoghue and Matthew Rabin ., 1997. "Doing It Now or Later," Economics Working Papers 97-253, University of California at Berkeley.
  4. Fairris, D. & Alston, L.J., 1992. ""Wages and the Intensity of Labor Effort: Efficiency Wages Versus Compensating Payments"," The A. Gary Anderson Graduate School of Management 92-43, The A. Gary Anderson Graduate School of Management. University of California Riverside.
  5. Caliendo, Frank & Aadland, David, 2007. "Short-term planning and the life-cycle consumption puzzle," Journal of Economic Dynamics and Control, Elsevier, vol. 31(4), pages 1392-1415, April.
  6. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6 National Bureau of Economic Research, Inc.
  7. repec:oup:qjecon:v:107:y:1992:i:2:p:573-97 is not listed on IDEAS
  8. Filer, Randall K., 1987. "Joint estimates of the supply of labor hours and the intensity of work effort," Journal of Behavioral Economics, Elsevier, vol. 16(3), pages 1-12.
  9. repec:oup:qjecon:v:117:y:2002:i:3:p:1039-1073 is not listed on IDEAS
  10. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  11. repec:oup:qjecon:v:105:y:1990:i:2:p:255-83 is not listed on IDEAS
  12. repec:oup:qjecon:v:112:y:1997:i:2:p:443-77 is not listed on IDEAS
  13. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  14. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S11-44, August.
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