Time-Inconsistency and Saving: Experimental Evidence from Low-Income Tax Filers
    Working Paper 21272
  
        
    DOI 10.3386/w21272
  
        
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          We conduct a field experiment designed to test theories of time-inconsistency, namely a "Beta-Delta" model of present bias. The experiment takes place in the context of a saving decision made by low-income tax filers who can deposit their income tax refund into an illiquid account. We find qualitative evidence consistent with present-biased preferences. The tradeoff between an earlier payment or a later one is much more skewed toward taking the early payment when the decision is made on the spot than when the decision is made in advance. We estimate a β and δ of 0.34 and 1.08 over an 8-month horizon, respectively, which translates into an annual discount rate of 164%.
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      Copy CitationDamon Jones and Aprajit Mahajan, "Time-Inconsistency and Saving: Experimental Evidence from Low-Income Tax Filers," NBER Working Paper 21272 (2015), https://doi.org/10.3386/w21272.
 
     
    