Which measures of time preference best predict outcomes: Evidence from a large-scale field experiment

Stephen Burks; Jeffrey Carpenter; Lorenz Götte; Aldo Rustichini

doi:10.1016/j.jebo.2012.03.012

Which measures of time preference best predict outcomes: Evidence from a large-scale field experiment

Stephen Burks, Jeffrey Carpenter, Lorenz Götte, Aldo Rustichini

Economics (Twin Cities)

Research output: Contribution to journal › Article › peer-review

61 Scopus citations

Abstract

Economists and psychologists have devised numerous instruments to measure time preferences and have generated a rich literature examining the extent to which time preferences predict important outcomes; however, we still do not know which measures work best. With the help of a large sample of non-student participants and administrative data on outcomes, we gather four different time preference measures and test the extent to which they predict both on their own and when they are all forced to compete head-to-head. Our results suggest that the now familiar (β, δ) formulation of present bias and exponential discounting predicts best, especially when both parameters are used.

Original language	English (US)
Pages (from-to)	308-320
Number of pages	13
Journal	Journal of Economic Behavior and Organization
Volume	84
Issue number	1
DOIs	https://doi.org/10.1016/j.jebo.2012.03.012
State	Published - Sep 2012

Bibliographical note

Funding Information:
The authors, who are listed in alphabetical order, gratefully acknowledge financial support from the MacArthur Foundations's Norms and Preferences Research Network, the Sloan Foundation, the Trucking Industry Program at Gerogia Tech, the University of Minnesota, Morris, and from the cooperating motor carrier.

Keywords

Discounting
Field experiment
Impatience
Present bias
Time preference

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10.1016/j.jebo.2012.03.012

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abstract = "Economists and psychologists have devised numerous instruments to measure time preferences and have generated a rich literature examining the extent to which time preferences predict important outcomes; however, we still do not know which measures work best. With the help of a large sample of non-student participants and administrative data on outcomes, we gather four different time preference measures and test the extent to which they predict both on their own and when they are all forced to compete head-to-head. Our results suggest that the now familiar (β, δ) formulation of present bias and exponential discounting predicts best, especially when both parameters are used.",

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AU - Carpenter, Jeffrey

AU - Götte, Lorenz

AU - Rustichini, Aldo

N1 - Funding Information: The authors, who are listed in alphabetical order, gratefully acknowledge financial support from the MacArthur Foundations's Norms and Preferences Research Network, the Sloan Foundation, the Trucking Industry Program at Gerogia Tech, the University of Minnesota, Morris, and from the cooperating motor carrier.

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Which measures of time preference best predict outcomes: Evidence from a large-scale field experiment

Abstract

Bibliographical note

Keywords

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