Time Preference Instability, Financial and Working Status
Quaderni - Working Paper DSE N° 924
20 Pages Posted: 13 Feb 2014
Date Written: February 12, 2014
Abstract
In this paper we study the drivers of change in individuals’ discount rates. Our panel dataset allows us to jointly consider socio-demographics, financial status and literacy, as well as job characteristics among the possible determinants. Our results suggest that individual time-preferences are not stable over time, especially among individuals who hold debts. Labour market variables do not play any direct role. A large part of the variation, however, is not explained by none these drivers. This supports the view that discount rates are related to an underlying unobservable individual trait.
Keywords: Time-preferences, financial constraints, debts
JEL Classification: C33, D1, D90
Suggested Citation: Suggested Citation