Happiness and Time Preference: The Effect of Positive Affect in a Random-Assignment Experiment

Ifcher, John; Zarghamee, Homa

doi:10.1257/aer.101.7.3109

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American Economic Review: Vol. 101 No. 7 (December 2011)

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Happiness and Time Preference: The Effect of Positive Affect in a Random-Assignment Experiment

Article Citation

Ifcher, John, and Homa Zarghamee. 2011. "Happiness and Time Preference: The Effect of Positive Affect in a Random-Assignment Experiment." American Economic Review, 101(7): 3109-29.

DOI: 10.1257/aer.101.7.3109

Abstract

We conduct a random-assignment experiment to investigate whether positive affect impacts time preference, where time preference denotes a preference for present over future utility. Our result indicates that, compared to neutral affect, mild positive affect significantly reduces time preference over money. This result is robust to various specification checks, and alternative interpretations of the result are considered. Our result has implications for the effect of happiness on time preference and the role of emotions in economic decision making, in general. Finally, we reconfirm the ubiquity of time preference and start to explore its determinants. (JEL D12, D83, I31)

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Authors

Ifcher, John (Santa Clara U)
Zarghamee, Homa (Santa Clara U)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
D83: Search; Learning; Information and Knowledge; Communication; Belief
I31: General Welfare