Working Paper: NBER ID: w18755
Authors: Jeffrey R. Brown; Zoran Ivković; Scott Weisbenner
Abstract: We study the empirical determinants of intertemporal choice by analyzing a unique decision Croatian retirees made recently about whether to accept an immediate pension payment or a larger stream of delayed payments. Individual decisions are correlated in sensible ways with income, liquidity constraints, longevity expectations, and other covariates. Attitudes toward government also matter: those less confident that the government will honor its commitments are more likely to take the immediate stream of payments. Those who believe it is important to receive "the full amount due, no matter how long it takes" are substantially more likely to take the delayed payments.
Keywords: intertemporal choice; pension payments; Croatian retirees; political risk; liquidity constraints
JEL Codes: D12; D91; H31; H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| younger individuals (J14) | defer payments (G51) |
| individuals with children (J13) | defer payments (G51) |
| bequest motive (D64) | defer payments (G51) |
| higher income (D31) | defer payments (G51) |
| absence of liquidity constraints (D10) | defer payments (G51) |
| lower confidence in government commitments (H81) | immediate payments (J33) |
| concern about receiving full amount owed (G33) | defer payments (G51) |