Measuring time preferences
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Accepted manuscript
Date
DOI
Authors
Cohen, Jonathan D.
Ericson, Keith
Laibson, David
White, John Miles
Version
OA Version
Citation
Cohen, J., Ericson, K., Laibson, D. and White, J. (forthcoming). Measuring Time Preferences. Journal of Economic Literature.
Abstract
We review research that measures time preferences—i.e., preferences over intertemporal tradeoffs. We distinguish between studies using financial flows, which we call “money earlier or later” (MEL) decisions and studies that use time-dated consumption/effort. Under different structural models, we show how to translate what MEL experiments directly measure (required rates of return for financial flows) into a discount function over utils. We summarize empirical regularities found in MEL studies and the predictive power of those studies. We explain why MEL choices are driven in part by some factors that are distinct from underlying time preferences.