IZA Paper: Stability of Time Preferences

Stability of Time Preferences
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Author Info
Meier, Stephan (sm3087@columbia.edu) (Columbia University)
Sprenger, Charles (csprenge@ucsd.edu) (University of California, San Diego)

Additional information is available for the following registered author(s):

Stephan Meier
Abstract

Individuals frequently face intertemporal decisions. For the purposes of economic analysis, the preference parameters assumed to govern these decisions are generally considered to be stable economic primitives. However, evidence on the stability of time preferences is notably lacking. In a large field study conducted over two years with about 1,400 individuals, time preferences are elicited using incentivized choice experiments. The aggregate distributions of discount factors and the proportion of present-biased individuals are found to be unchanged over the two years. At the individual level, the one year correlations in measured time preference parameters are found to be high by existing standards, though some individuals change their intertemporal choices potentially indicating unstable preferences. By linking time preference measures to tax return data, we show that identified instability is uncorrelated with socio-demographics and changes to income, future liquidity, employment and family composition.

Consideration of future consequences

Consideration of future consequences scale: Confirmatory Factor Analysis

D. Hevey, M. Pertl, K. Thomas, L. Maher, A. Craig and S. Ni Chuinneagain

Trinity College Dublin, Dublin 2, Ireland

Personality and Individual Differences
Volume 48, Issue 5, April 2010, Pages 654-657

Abstract:

Individual differences in the Consideration of Future Consequences (CFC) are typically assessed using the 12-item scale developed by Strathman, Gleicher, Boninger, and Edwards (1994). However, in contrast to the unidimensional model proposed by the scale developers, recent factor analyses have produced two-dimensional models of the scale. Confirmatory factor analyses were used in this study to evaluate different 1- and 2-factor models based on data provided by 590 (236 males, 354 females) young adult members of the general public. Although some alternative models showed promise, the 12-item single factor model with method effects associated with positively and negatively worded items provided best fit. Implications for the assessment of CFC are considered.

Keywords: Consideration of future consequences; Confirmatory Factor Analysis; Method effects