Aversion for early death and the structure of time preference

Antoine Bommier ()
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Antoine Bommier: http://www.inra.fr/Internet/Departements/ESR/UR/lea/equipe/bommier/bommier.htm

Research Unit Working Papers from Laboratoire d'Economie Appliquee, INRA

Abstract: This papers provides an explanation for time preference: we show that in the case of uncertain lifetime, future consumption should be weighted not only according to survival probability, but also according to a discount factor due to risk aversion with respect to the length of life. When individuals are not risk neutral, this discount factor is generally not exponential. Time inconsistent preferences may therefore appear as a consequence of risk aversion with respect to the length of life. Simulations based on plausible utility for life years and on realistic mortality patterns provide in fact a strong support for hyperbolic discounting.

Keywords: Intertemporal choice; life cycle model; uncertain lifetime; time inconsistency; hyperbolic discounting; utility for life years. (search for similar items in EconPapers)
JEL-codes: D81 D91 J17 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2001-09
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Persistent link: https://EconPapers.repec.org/RePEc:lea:leawpi:0106

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