Estimating Discount Functions with Consumption Choices over the Lifecycle

David Laibson, Sean Chanwook Lee, Peter Maxted, Andrea Repetto () and Jeremy Tobacman

No 13314, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate β-δ time preferences and relative risk aversion (RRA) using a lifecycle model including stochastic income, liquid and illiquid assets, credit cards, dependents, Social Security, mortality, and bequests. Preference parameters are identified by cross-tabulating four lifecycle age intervals and four balance sheet moments: the proportion of households carrying (i.e., revolving) credit card debt, average carried credit card debt, average net wealth among households carrying credit card debt, and average net wealth among households not carrying credit card debt. The sixteen moments are approximately matched by (MSM) parameter estimates β = 0:50, δ = 0:99, and RRA = 1:3.

JEL-codes: D91 E21 (search for similar items in EconPapers)
Date: 2007-08
New Economics Papers: this item is included in nep-dge and nep-mac
Note: EFG
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Citations: View citations in EconPapers (194)

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Related works:
Working Paper: Estimating Discount Functions with Consumption Choices over the Lifecycle (2007)
Working Paper: Estimating Discount Functions with Consumption Choices over the Lifecycle (2007)
Working Paper: Estimating Discount Functions with Consumption Choices over the Lifecycle (2005)
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