Measuring time preferences

We review research that measures time preferences—i.e., preferences over intertemporal tradeoffs. We distinguish between studies using financial flows, which we call “money earlier or later” (MEL) decisions and studies that use time-dated consumption/effort. Under different structural models, we show how to translate what MEL experiments directly measure (required rates of return for financial flows) into a discount function over utils. We summarize empirical regularities found in MEL studies and the predictive power of those studies. We explain why MEL choices are driven in part by some factors that are distinct from underlying time preferences.National Institutes of Health (NIA R01AG021650 and P01AG005842) and the Pershing Square Fund for Research in the Foundations of Human Behavior

Behavioral Economics: Past, Present, Future

Behavioral economics increases the explanatory power of economics by providing it with more realistic psychological foundations. This book consists of representative recent articles in behavioral economics. This chapter is intended to provide an introduction to the approach and methods of behavioral economics, and to some of its major findings, applications, and promising new directions. It also seeks to fill some unavoidable gaps in the chapters’ coverage of topics

Farmers' behavior and the provision of public goods: towards an analytical framework

The new CAP reform aims to stimulate the role of agriculture as provider of public goods. An analytical framework is developed to model farmers’ decision making and to gain insight into farmers’ behavior in response to a number of policy instruments. The framework integrates characteristics of farm, farmer, market, as well as the policy instruments. Theoretical analysis suggests that attitudes, off-farm employment opportunities, non-pecuniary benefits and expectations of future developments can play important roles in farmer’s decision making regarding the provision of public goods. Empirical research is needed to test the hypothesis

The Role of Intertemporal Preferences, Active Consideration of Health Outcomes, and Simple Health Prompts on the Nutritional Quality of Food Choices

This thesis consists of three chapters. The first chapter introduces the thesis by highlighting a brief review of intertemporal preferences, active consideration of health outcomes, and health prompts during food choices. The introduction paves the way for the following two chapters, which are related, but stand-alone papers. In the second chapter, we explore a novel question: how does actively considering health outcomes (both current and future) during decision-making affect the nutritional quality of food choices? We explore this question with an online experiment on food choices. Our findings show that active consideration of health outcomes leads to choosing products with high nutritional quality. The results of the second chapter motivate the third chapter, which studies an intervention during decision-making that may influence people’s decision processes. In the third chapter, we build on the findings of chapter 2 to examine whether a simple message that highlights health impacts of food options leads people to increase the healthiness of food choices. The contribution of this chapter is to examine pathways through which these types of messages act. Specifically, we examine whether the health message changes attention and/or intertemporal preferences. The results show that simple messages during choice increase the consideration of health outcomes but do not change intertemporal preferences. Our findings show that health prompts lead to healthier food choices by increasing consideration of health during choice. Advisor: Christopher R. Gustafso

Is the Discount Rate Relevant in Explaining the Environmental Kuznets Curve?

In this paper we use Pindyck’s model (2002) to show that the discount rate may play an important role in explaining for the income-pollution pattern observed in the real world. Low levels of income involve high values of discount rate, that are obstacles to the adoption of a pollution abatement policy. Only when the discount rate falls, as a consequence of growth, will it be possible to implement measures for emissions reduction. Thus we are able to derive an inverse U-shaped income-pollution pattern, making use of an argument that has never yet been introduced in the economic debate on this issue.Discount rate, Environmental Kuznets Curve, Income, Stock pollutants

Health Prompts Affect Consideration of Health but Not Intertemporal Preferences While Promoting Healthier Food Choices

Diet-related diseases impact populations across the globe. While intertemporal preferences—a fundamental preference for the distribution of benefits across time—have been used to explain low-quality food choices, the recent literature proposes another cause: inattention to the future implications (or opportunity costs) of the options faced. Food choices tend to become habitual to conserve cognitive resources, rather than carefully modeling future health impacts. Both low discount rates for future benefits and attention to future health impacts predict healthier decisions. While intertemporal preferences are stable, attention may provide an opportunity to intervene in the decision process to promote healthier decisions. In this study, we test the impact of a simple message that highlights health during food choice on the healthiness of the foods chosen and on health consideration and intertemporal preferences. Our results show that actively considering health outcomes and lower discount rates lead to healthier food choices. We find that messaging increases the consideration of health outcomes during food choice but does not affect intertemporal preferences, suggesting that simple prompts may be an effective way to promote decisions balancing short- and long-term benefits by drawing attention to the overlooked opportunity costs of choices

Learning by Doing vs Learning by Researching in a Model of Climate Change Policy Analysis

Many predictions and conclusions in climate change literature have been made on the basis of theoretical analyses and quantitative models that assume exogenous technological change. One may wonder if those policy prescriptions hold in the more realistic case of endogenously evolving technologies. In previous work we modified a popular integrated assessment model to allow for an explicit role of the stock of knowledge which accumulates through R&D investment. In our formulation knowledge affects the output production technology and the emission-output ratio. In this paper we make progress in our efforts aimed to model the process of technological change. In keeping with recent theories of endogenous growth, we specify two ways in which knowledge accumulates: via a deliberate, optimally selected R&D decision or via experience, giving rise to Learning by Doing. We simulate the model under the two versions of endogenous technical change and look at the dynamics of a number of relevant variables.Climate Policy, Environmental Modeling, Integrated Assessment, Technical Change

Structural changes in economics during the last fifty years

This essay portrays the major currents in recent economic thinking against the orthodoxy and dogmatism of neoclassical economics. It places behavioral economics, experimental economics, evolutionary economics, ecological economics, new institutional economics, agent-based computational economics and post-autistic economics vis-à-vis the classical and the neoclassical economics. It concludes that we may expect a synthesis of all these strands of economic thinking in the near future that will replace neoclassical economics from the citadel of mainstream. Teaching of these strands of new economics has already begun in many universities, although in an un-integrated manner. However, until the neoclassical microeconomics and macroeconomics are replaced by their alternatives and necessary as well as convincing tools of economic analysis are developed, neoclassicism would not give way to modern economics.Behavioral; experimental; evolutionary; ecological; new institutional; agent-based computational; post-autistic; classical; neoclassical, economics; bounded rationality; heterodox; individualism; pluralism

Kontinuitet s budućim ja povećava odgovornost tijekom ograničenja povezanih s bolešću COVID-19

The failure to engage in responsible behaviour is related to the inability to consider future consequences of actions. An experiment was conducted to examine whether increasing the vividness of the future self affects adherence and endorsement of COVID-19 safety measures. A total of 184 participants were randomly assigned to 3 groups. Depending on the experimental condition, they were tasked with writing a letter to other people (their friend), a proximal future self, and a distant future self. Participants in the distant future self and the other people conditions showed greater adherence intentions than proximal future self participants. No differences were found between the distant future self and the other people group. Further group differences were found in the endorsement of safety measures, with the distant-future self-group showing more condemnation than the other two groups. Commitment to the COVID-19 safety measures mediated the group differences on both dependent variables. The results are discussed within the framework of the Construal Level Theory and the Future Self-continuity model.Neodgovorno ponašanje u sadašnjosti povezano je s nemogućnošću razmatranja budućih posljedica. Proveden je eksperiment da bi se ispitalo utječe li zamišljanje budućega sebe na poštivanje i odobravanje sigurnosnih mjera zaštite od bolesti COVID-19. Ukupno 184 ispitanika bila su nasumična raspoređena u 3 skupine. Ovisno o eksperimentalnome uvjetu, ispitanicisu imali zadatak napisati pismo drugim ljudima (svojim prijateljima), bliskomu budućem ja i dalekomu budućem ja. Ispitanici u uvjetima udaljenoga budućeg ja i drugih ljudi pokazali su veće namjere pridržavanja mjera od ispitanika u uvjetu bliskoga budućeg ja. Nisu pronađene razlike između udaljenoga budućeg ja i drugih ljudi. Daljnje međugrupne razlike utvrđene su u odobravanju sigurnosnih mjera, pri čemu je grupa koja je zamišljala daleko buduće ja pokazala veće tendencije osuđivanja kršenja mjera od drugih dviju grupa. Predanost mjerama sigurnosti zaštite od bolesti COVID-19 bila je medijator grupnim razlikama za obje zavisne varijable. Rezultati se raspravljaju u okviru teorije konstrukcijskoga nivoa i modela kontinuiteta s budućim ja

Behaviorally informed policies for household financial decisionmaking

This is the final version of the article. Available from the publisher via the DOI in this record.Low incomes, limited financial literacy, fraud, and deception are just a few of the many intractable economic and social factors that contribute to the financial difficulties that households face today. Addressing these issues directly is difficult and costly. But poor financial outcomes also result from systematic psychological tendencies, including imperfect optimization, biased judgments and preferences, and susceptibility to influence by the actions and opinions of others. Some of these psychological tendencies and the problems they cause may be countered by policies and interventions that are both low cost and scalable. We detail the ways that these behavioral factors contribute to consumers' financial mistakes and suggest a set of interventions that the federal government, in its dual roles as regulator and employer, could feasibly test or implement to improve household financial outcomes in a variety of domains: retirement, short-term savings, debt management, the take-up of government benefits, and tax optimization