This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 102 No. 7 (December 2012)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

Estimating Time Preferences from Convex Budgets

Article Citation

Andreoni, James, and Charles Sprenger. 2012. "Estimating Time Preferences from Convex Budgets." American Economic Review, 102(7): 3333-56.

DOI: 10.1257/aer.102.7.3333

Abstract

Experimentally elicited discount rates are frequently higher than what seems reasonable for economic decision-making. Such high rates are often attributed to present-biased discounting. A well-known bias of standard measurements is the assumption of linear consumption utility. Attempting to correct this bias using measures of risk aversion to identify concavity, researchers find reasonable discounting but at the cost of exceptionally high utility function curvature. We present a new methodology for identifying time preferences, both discounting and curvature, from simple allocation decisions. We find reasonable levels of both discounting and curvature and, surprisingly, dynamically consistent time preferences. (JEL C91, D12, D81)

Article Full-Text Access

Full-text Article

Additional Materials

Download Data Set (574.28 KB) | Online Appendix (1.28 MB)

Authors

Andreoni, James (U CA, San Diego)
Sprenger, Charles (Stanford U)

JEL Classifications

C91: Design of Experiments: Laboratory, Individual
D12: Consumer Economics: Empirical Analysis
D81: Criteria for Decision-Making under Risk and Uncertainty


American Economic Review


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us