Time Preferences and Consumer Behavior

NBER Working Paper No. 20320

Issued in July 2014

NBER Program(s):Environment and Energy Economics, Health Economics



We investigate the predictive power of survey-elicited time preferences using a representative sample of US residents. In regressions controlling for demographics and risk preferences, we show that the discount factor elicited from choice experiments using multiple price lists and real payments predicts various health, energy, and financial outcomes, including overall self-reported health, smoking, drinking, car fuel efficiency, and credit card balance. We allow for time-inconsistent preferences and find that the long-run and present bias discount factors (δ and β) are each significantly associated in the expected direction with several of these outcomes. Finally, we explore alternate measures of time preference. Elicited discount factors are correlated with several such measures, including self-reported willpower. A multiple proxies approach using these alternate measures shows that our estimated associations between the time-consistent discount factor and health, energy, and financial outcomes may be conservative.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w20320

Published: David Bradford & Charles Courtemanche & Garth Heutel & Patrick McAlvanah & Christopher Ruhm, 2017. "Time preferences and consumer behavior," Journal of Risk and Uncertainty, vol 55(2-3), pages 119-145. citation courtesy of

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