Intertemporal Choice Bracketing and the Measurement of Time Preferences

Yonas Alem, John Loeser and Aprajit Mahajan

No 32683, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Economists routinely rationalize financial behaviors and prominent empirical anomalies using time preferences inferred from money earlier or later (MEL) responses; yet theory suggests such choices could instead reflect investment returns. We conduct a lab-in-the-field experiment in Kenya combining repeated MEL, randomized large cash transfers, and an illiquid savings product. Neither time preferences nor marginal investment returns exclusively rationalize choices: randomized cash transfers significantly affect MEL responses, yet subjects also fail to arbitrage across economically equivalent MEL and savings opportunities. However, we provide evidence that heterogeneity in time preferences drives the predictive power of MEL for savings decisions, rationalizing routine practice.

JEL-codes: O10 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-cbe, nep-dcm and nep-exp
Note: DEV
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w32683.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

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:nbr:nberwo:32683

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32683
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().