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Is there a Daily Discount Rate? Evidence from the Food Stamp Nutrition Cycle

  • Jesse M. Shapiro

    (Harvard University)

A central prediction of the quasi-hyperbolic model of time preference is that consumers will be impatient over short-run tradeoffs. I present the first nonlaboratory test of this implication using data on the nutritional intake of food stamp recipients. Caloric intake declines by 10 to 15 percent over the 30-day period following receipt of food stamps, implying a significant preference for immediate consumption. Resulting estimates of the daily discount rate are inconsistent with any reasonable calibration of an exponential discounting model. The data support an explanation based on time preference and reject several alternative explanations, including high elasticities of intertemporal substitution, strategic interactions and food depreciation.

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Paper provided by EconWPA in its series Microeconomics with number 0304005.

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Length: 40 pages
Date of creation: 21 Apr 2003
Date of revision: 21 Apr 2003
Handle: RePEc:wpa:wuwpmi:0304005
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP; pages: 40 ; figures: included
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  1. Parke E. Wilde & Christine K. Ranney, 2000. "The Monthly Food Stamp Cycle: Shooping Frequency and Food Intake Decisions in an Endogenous Switching Regression Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 200-213.
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