Looking Ahead: Subjective Time Perception and Individual Time Discounting

W. David Bradford, Paul Dolan and Matteo Galizzi

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Time discounting is at the heart of economic decision-making. We disentangle hyperbolic discounting from subjective time perception using experimental data from incentive-compatible tests to measure time preferences, and a set of experimental tasks to measure time perception. The two behavioural parameters may be related to two factors that affect how we look ahead to future events. The first is that some component of time preferences reflect hyperbolic discounting. The second factor is that non-constant discounting may also be a reflection of subjective time perception: if people's perception of time follows a near logarithmic process (as all other physiological perceptions such as heat, sound, and light do) then all existing estimates of individual discounting will be mis-measured and incorrectly suggest "hyperbolic" discounting, even if discounting over subjective time is constant. To test these hypotheses, we empirically estimate the two distinct behavioural parameter s using data collected from 178 participants to an experiment conducted at the London School of Economics Behavioural Research Lab. The results support the hypothesis that apparent non-constant discounting is largely a reflection of subjective time perception.

Keywords: Time preferences; Time perception; Hyperbolic discounting (search for similar items in EconPapers)
JEL-codes: D1 D10 D91 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-neu
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Citations: View citations in EconPapers (7)

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