Non-parametric Analysis of Time-Inconsistent Preferences. (2nd January 2021)

• Record Type: Journal Article
• Authors: Blow, Laura; Browning, Martin; Crawford, Ian
• Is Part Of: Review of economic studies. Volume 88:Number 6(2021)
• Page Start: 2687
• Page End: 2734
• Publication Date: 2021-01-02
• Subjects: Quasi-hyperbolic discounting -- Revealed preference; D11 -- D12 -- D90; Economics -- Periodicals; 330
• DOI: 10.1093/restud/rdaa089
• Languages: English
• ISSNs: 0034-6527

Abstract

Abstract: This article provides a revealed preference characterisation of quasi-hyperbolic discounting which is designed to be applied to readily available expenditure surveys. We describe necessary and sufficient conditions for the leading forms of the model and also study the consequences of the restrictions on preferences popularly used in empirical lifecycle consumption models. Using data from a household consumption panel dataset, we explore the prevalence of time-inconsistent behaviour. The quasi-hyperbolic model provides a significantly more successful account of behaviour than the alternatives considered. We estimate the joint distribution of time preferences and the distribution of discount functions at various time horizons.