Working Paper: NBER ID: w20320
Authors: David Bradford; Charles Courtemanche; Garth Heutel; Patrick McAlvanah; Christopher Ruhm
Abstract: 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.
Keywords: Time Preferences; Consumer Behavior; Health Outcomes; Energy Efficiency; Financial Decisions
JEL Codes: D14; D91; I10; Q40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Discount factor elicited from choice experiments (D11) | Health outcomes (I14) |
| Discount factor elicited from choice experiments (D11) | Smoking (L66) |
| Discount factor elicited from choice experiments (D11) | Drinking (L66) |
| Discount factor elicited from choice experiments (D11) | Car fuel efficiency (Q41) |
| Discount factor elicited from choice experiments (D11) | Credit card balances (G51) |
| Higher time-consistent discount factors (D15) | Better health outcomes (I14) |
| Present bias (D15) | Negative health behaviors (smoking, binge drinking) (I12) |
| Present-biased individuals (D15) | Less likely to invest in energy-efficient technologies (G31) |
| Elicited discount factors (D15) | Self-reported willpower (D91) |
| Elicited discount factors (D15) | Other proxies of time preferences (D15) |