Time Preferences and Consumer Behavior

55 Pages Posted: 24 Jul 2014

See all articles by W. David Bradford

W. David Bradford

University of Georgia - Department of Public Administration and Policy; University of Georgia - Department of Economics

Charles Courtemanche

Georgia State University - Andrew Young School of Policy Studies

Garth Heutel

University of North Carolina (UNC) at Greensboro - Department of Economics

Patrick McAlvanah

Federal Trade Commission - Bureau of Economics

Christopher J. Ruhm

University of Virginia - Frank Batten School of Leadership and Public Policy; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: July 2014

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.

Suggested Citation

Bradford, W. David and Courtemanche, Charles and Heutel, Garth and McAlvanah, Patrick and Ruhm, Christopher J., Time Preferences and Consumer Behavior (July 2014). NBER Working Paper No. w20320, Available at SSRN: https://ssrn.com/abstract=2471213

W. David Bradford (Contact Author)

University of Georgia - Department of Public Administration and Policy ( email )

Athens, GA 30602-6254
United States

University of Georgia - Department of Economics ( email )

Athens, GA 30602-6254
United States

Charles Courtemanche

Georgia State University - Andrew Young School of Policy Studies ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-413-0082 (Phone)

Garth Heutel

University of North Carolina (UNC) at Greensboro - Department of Economics ( email )

Greensboro, NC 27402-6165
United States

Patrick McAlvanah

Federal Trade Commission - Bureau of Economics ( email )

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Christopher J. Ruhm

University of Virginia - Frank Batten School of Leadership and Public Policy ( email )

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United States
434-924-7581 (Phone)

HOME PAGE: http://batten.virginia.edu/cruhm.html

National Bureau of Economic Research (NBER) ( email )

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IZA Institute of Labor Economics ( email )

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Germany

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