NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Measuring Time Preferences

Jonathan D. Cohen, Keith Marzilli Ericson, David Laibson, John Myles White

NBER Working Paper No. 22455
Issued in July 2016
NBER Program(s):AG, PE

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. 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.

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Document Object Identifier (DOI): 10.3386/w22455

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