A theory of personal budgeting

Simone Galperti ()
Additional contact information
Simone Galperti: Department of Economics, University California, San Diego

Theoretical Economics, 2019, vol. 14, issue 1

Abstract: Prominent research argues that consumers often use personal budgets to manage self-control problems. This paper analyzes the link between budgeting and self-control problems in consumption-saving decisions. It shows that the use of good-specific budgets depends on the combination of a demand for commitment and the demand for flexibility resulting from uncertainty about intratemporal trade-offs between goods. It explains the subtle mechanism which renders budgets useful commitments, their interaction with minimum-savings rules (another widely-studied form of commitment), and how budgeting depends on the intensity of self-control problems. This theory matches several empirical findings on personal budgeting.

Keywords: Budget; minimum-savings rule; commitment; flexibility; intratemporal trade-off; uncertainty; present bias (search for similar items in EconPapers)
JEL-codes: D23 D82 D86 D91 E62 G31 (search for similar items in EconPapers)
Date: 2019-01-30
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://econtheory.org/ojs/index.php/te/article/viewFile/20190173/22778/676 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:2881

Access Statistics for this article

Theoretical Economics is currently edited by Simon Board, Federico Echenique, Thomas Mariotti, Dilip Mookherjee, Florian Scheuer, Ran Spiegler

More articles in Theoretical Economics from Econometric Society
Bibliographic data for series maintained by Martin J. Osborne ().