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Universal Time Preference

Author

Listed:
  • Marc Oliver Rieger
  • Mei Wang
  • Thorsten Hens

Abstract

Time preferences are central to human decision making; therefore, a thorough understanding of their international differences is highly relevant. Previous measurements, however, vary widely in their methodology, from questions answered on the Likert scale to lottery-type questions. We show that these different measurements correlate to a large degree and that they have a common factor that can predict a broad spectrum of variables: the countries’ credit ratings, their innova-tion, gas prices (as a proxy for environmental protection), body mass index (as a proxy for health consciousness), and average years of school attendance. The resulting data on this time prefer-ence factor for N=117 countries and regions will be highly useful for further research. Our ag-gregation method is applicable to merge cross-cultural studies that measure the same latent construct with different methodologies.

Suggested Citation

  • Marc Oliver Rieger & Mei Wang & Thorsten Hens, 2020. "Universal Time Preference," Working Paper Series 2020-07, University of Trier, Research Group Quantitative Finance and Risk Analysis.
  • Handle: RePEc:trr:qfrawp:202007
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    References listed on IDEAS

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    More about this item

    Keywords

    decision making; time preferences;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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