Measuring time preferences: A comparison of experimental methods ☆

Eliciting time preferences has become an important component of both laboratory and field experiments, yet there is no consensus as how to best measure discounting. We examine the predictive validity of two recent, simple, easily administered, and individually successful elicitation tools: convex time budgets (CTB) and double multiple price lists (DMPL). Using similar methods, the CTB and DMPL are compared using within- and out-of-sample predictions. While each perform equally well within sample, the CTB significantly outperforms the DMPL on out-of-sample measures.

[1]  Jerry A. Hausman,et al.  Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables , 1979 .

[2]  Ted O’Donoghue,et al.  Doing It Now or Later , 1999 .

[3]  Charles Sprenger,et al.  Estimating Time Preferences from Convex Budgets , 2010 .

[4]  M. Rabin.  Risk Aversion and Expected Utility Theory: A Calibration Theorem , 2000 .

[5]  W. Mischel,et al.  Delay of gratification in children. , 1989, Science.

[6]  Jessica Goldberg,et al.  Revising Commitments: Field Evidence on the Adjustment of Prior Choices , 2012 .

[7]  A. Khwaja,et al.  Report Cards: The Impact of Providing School and Child Test Scores on Educational Markets , 2014 .

[8]  Glenn W. Harrison,et al.  Identifying Time Preferences With Experiments: Comment , 2013 .

[9]  David I. Laibson,et al.  Golden Eggs and Hyperbolic Discounting , 1997 .

[10]  Stephan Meier,et al.  Time Discounting Predicts Creditworthiness , 2012, Psychological science.

[11]  J. Potters,et al.  An experiment on risk taking and evaluation periods , 1997 .

[12]  G. Loewenstein,et al.  Time Discounting and Time Preference: A Critical Review , 2002 .

[13]  R. Duncan Luce,et al.  Individual Choice Behavior , 1959 .

[14]  Muriel Niederle,et al.  Working Over Time: Dynamic Inconsistency in Real Effort Tasks , 2013 .

[15]  M. Cagetti,et al.  Wealth Accumulation Over the Life Cycle and Precautionary Savings , 2003 .

[16]  Morten I. Lau,et al.  Eliciting Risk and Time Preferences , 2008 .

[17]  David Laibson,et al.  Estimating Discount Functions with Consumption Choices Over the Lifecycle , 2007 .

[18]  David Laibson,et al.  A Debt Puzzle , 2000, Knowledge, Information, and Expectations in Modern Macroeconomics.

[19]  J. T. Warner,et al.  The Personal Discount Rate: Evidence from Military Downsizing Programs , 2001 .

[20]  Glenn W. Harrison,et al.  Discounting behavior: A reconsideration☆ , 2014 .

[21]  Morten I. Lau,et al.  Estimating Individual Discount Rates in Denmark: A Field Experiment , 2002 .

[22]  Dean S. Karlan,et al.  Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines , 2005 .

[23]  A. Falk,et al.  Are Risk Aversion and Impatience Related to Cognitive Ability? , 2007, SSRN Electronic Journal.

[24]  M. Degroot,et al.  Measuring utility by a single-response sequential method. , 1964, Behavioral science.

[25]  J. Andreoni,et al.  Risk Preferences Are Not Time Preferences , 2012 .

[26]  Stephan Meier,et al.  Present-Biased Preferences and Credit Card Borrowing , 2009, SSRN Electronic Journal.

[27]  Emily C Lawrance.  Poverty and the Rate of Time Preference: Evidence from Panel Data , 1991, Journal of Political Economy.

[28]  Charles A. Holt,et al.  Risk Aversion and Incentive Effects , 2002 .

[29]  Charles Sprenger,et al.  Risk Preferences Are Not Time Preferences: Reply , 2015 .

[30]  Daniel Read,et al.  Can intertemporal choice experiments elicit time preferences for consumption? , 2007 .

[31]  D. Ariely,et al.  “Coherent Arbitrariness”: Stable Demand Curves Without Stable Preferences , 2003 .

[32]  David Laibson,et al.  Individual laboratory-measured discount rates predict field behavior , 2008, Journal of risk and uncertainty.

[33]  J. Parker,et al.  Consumption Over the Life Cycle , 1999 .

[34]  M. Coller,et al.  Eliciting Individual Discount Rates , 1999 .

[35]  Peter Kuhn,et al.  Self Control and Intertemporal Choice: Evidence from Glucose and Depletion Interventions , 2014, SSRN Electronic Journal.

[36]  Philippe Aghion,et al.  Knowledge, information, and expectations in modern macroeconomics : in honor of Edmund S. Phelps , 2003 .