What Induces Children to Consume (More)?

43 Pages Posted: 30 May 2019 Last revised: 5 Jan 2021

See all articles by Moritz Lukas

Moritz Lukas

University of Hamburg

Markus Noeth

University of Hamburg

Date Written: January 4, 2021

Abstract

Based on a lab-in-the-field experiment with 246 elementary school pupils, we find that, similarly as for adults, lower interest rates and opt-in defaults make children more likely to consume immediately instead of saving; moreover, the amount of savings decreases with lower interest rates. Our analyses reveal a substantial degree of heterogeneity: while boys react more strongly to interest rate changes and girls react more strongly to defaults, children start to get susceptible to savings rewards around third grade, when they receive an allowance, and with a lower allowance; this suggests that savings behavior is learnable and malleable to a certain extent. Our findings shed new light on the development and malleability of traits related to intertemporal consumption.

Keywords: Time Preferences, Household Finance, Behavioral Finance, Experimental Finance

JEL Classification: C91, D14, D91

Suggested Citation

Lukas, Moritz and Noeth, Markus, What Induces Children to Consume (More)? (January 4, 2021). Available at SSRN: https://ssrn.com/abstract=3384523 or http://dx.doi.org/10.2139/ssrn.3384523

Moritz Lukas (Contact Author)

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Markus Noeth

University of Hamburg ( email )

Chair of Banking and Behavioral Finance
WiSo
Hamburg, 20146
Germany
+49-40-42838 3337 (Phone)
+49-40-42838 5512 (Fax)

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