Constant Discounting, Temporal Instability and Dynamic Inconsistency in Denmark: A Longitudinal Field Experiment

Harrison, Glenn W; Lau, Morten I; Yoo, Hong Il

Abstract

Claims that individuals have dynamically inconsistent preferences are usually made by studying individual discount rates over different time delays, but where those discount rates are elicited at a single point in time. However, to test dynamic inconsistency one has to know if the same subject has a different discounting function at a later point in time. We evaluate data from a longitudinal field experiment undertaken with a nationally representative sample of the adult Danish population. We cannot reject the hypothesis of constant discounting at the population level, but we reject the hypotheses of temporal stability and dynamic consistency.

Citation

Harrison, G. W., Lau, M. I., & Yoo, H. I. (online). Constant Discounting, Temporal Instability and Dynamic Inconsistency in Denmark: A Longitudinal Field Experiment. International Economic Review, https://doi.org/10.1111/iere.12729

• Journal Article Type: Article
• Acceptance Date: Aug 2, 2024
• Online Publication Date: Aug 31, 2024
• Deposit Date: Aug 22, 2024
• Publicly Available Date: Sep 11, 2024
• Journal: International Economic Review
• Print ISSN: 0020-6598
• Electronic ISSN: 1468-2354
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1111/iere.12729
• Keywords: Time Preferences; Dynamic Consistency; Longitudinal Experiments; Sample Selection and Attrition JEL Codes: D15; D90; C93; C51 †
• Public URL: https://durham-repository.worktribe.com/output/2763976