Time Discounting and Wealth Inequality
Ernst Fehr (),
David Lassen (),
Søren Leth-Petersen and
Gregers Nytoft Rasmussen
No 1916, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science
This paper documents a large association between individuals’ time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish highquality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory.
Keywords: Wealth inequality; savings behavior; time discounting; experimental methods; administrative data (search for similar items in EconPapers)
JEL-codes: C91 D15 D31 E21 (search for similar items in EconPapers)
Pages: 66 pages
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-ltv, nep-mac and nep-upt
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Journal Article: Time Discounting and Wealth Inequality (2020)
Working Paper: Time Discounting and Wealth Inequality (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:econwp:2019:16
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