OBESITY AND HYPERBOLIC DISCOUNTING: AN EXPERIMENTAL ANALYSIS

Behavioral economists maintain that addictions such as alcoholism, smoking and over-eating represent examples of present-bias in decision making that is fundamentally irrational. In this article, we develop a model of present bias and apparently hyperbolic discounting that is fully consistent with rational behavior. We construct an experiment to test our hypothesis and to determine whether discount rates differ for individuals who engage in behaviors that could endanger their health. Our results show that discount functions are quasi-hyperbolic in shape, and that obesity and drinking are positively related to the discount rate. Anti-obesity policy, therefore, would be best directed to informing individuals as to the long-term implications of short-term gratification, rather than taxing foods directly.addiction, discounting, experiments, hyperbolic, obesity, time-inconsistency, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Health Economics and Policy, C91, D12, D91, I18,

Obesity and Hyperbolic Discounting: An Experimental Analysis

Behavioral economists maintain that addictions such as alcoholism, smoking and over-eating represent examples of present-bias in decision making that is fundamentally irrational. In this article, we develop a model of present bias and apparently hyperbolic discounting that is fully consistent with rational behavior. We construct an experiment to test our hypothesis and to determine whether discount rates differ for individuals who engage in behaviors that could endanger their health. Our results show that discount functions are quasi-hyperbolic in shape, and that obesity and drinking are positively related to the discount rate. Anti-obesity policy, therefore, would be best directed to informing individuals as to the long-term implications of short-term gratification, rather than taxing foods directly.addiction, discounting, experiments, hyperbolic, obesity, time-inconsistency., Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Institutional and Behavioral Economics, C91, D12, D91, I18.,

Explaining the Fixed Cost Component of Discounting: The Importance of Students\u27 Liquidity Constraints

Utilizing experimental data on choices over real monetary rewards made by university students, we provide evidence that two measures of liquidity, income and employment status, significantly explain differences in patterns of discounting. We find an average fixed cost component of discounting in the range of $5 for unemployed students and near$0 for employed students. An increase in annual disposable income of $1000 decreases the fixed cost component of discounting by approximately$0.20 to $0.25. These findings can help resolve the puzzle that some studies in the literature find evidence of present-bias and magnitude effects and some do not

Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam

We conducted experiments in Vietnamese villages to determine the predictors of risk and time preferences. In villages with higher mean income, people are less loss-averse and more patient. Household income is correlated with patience but not with risk. We expand measurements of risk and time preferences beyond expected utility and exponential discounting, replacing those models with prospect theory and a three-parameter hyperbolic discounting model. Comparable risk parameter estimates have been found for Chinese farmers, using our method

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

Do Quasi-Hyperbolic Preferences Explain Academic Procrastination? An Empirical Evaluation

Traditional neoclassical thought fails to explain questions such as problems of self-control. Behavioural economics have explained these matters on the basis of the intertemporal preferences of individuals and, specifically, the so-called (β, δ) model which emphasises present bias. This opens the way to the analysis of new situations in which people can adopt incorrect indecisions that make it necessary for the government to intervene. The literature which has developed the (β, δ) model and its implications has generated a categorisation of people that is widely used but which lacks a systematic empirical evaluation. It is important to value the need for this public action. In this article, we develop a method which makes it possible to verify the main implications that this model has to explain the procrastination of university students. Using an experimental time discount task with real monetary incentives, we estimate the students’ β and δ parameters and we analyse their correlation with their answers to a series of questions concerning how they plan to study for an exam. The results are ambiguous given that they back some of the model’s conclusions but reject others, including a number of the most basic ones, such as the relation between present biases and some of the categories of people, these being essential to predict their behaviour

A Flexible Test for Present Bias and Time Preferences Using Land-Lease Contracts

When agents have present bias, they discount more between now and the next period than between period t (> 1) and t + 1. How fast the future discount rate (evaluated today) decays is an empirical question. We show that the discount function can be non-parametrically identified with contracts that specify payments that take place at various points in time in the future and which are traded and priced in a competitive market. We use a unique land lease-contract data set for Amsterdam, which has the above properties, to test for present bias in a flexible way. We find no evidence for present bias in this market. Even though we allow for a general-hyperbolic specification (which has exponential discounting as a special case), our estimates converge to an exponential discount function with a corresponding discount rate (in our baseline specification) of 8 %.present bias, hyperbolic discounting, discount rate, hedonic estimation

A Flexible Test for Present Bias and Time Preferences Using Land-Lease Contracts

When agents have present bias, they discount more between now and the next period than between period t (> 1) and t + 1. How fast the future discount rate (evaluated today) decays is an empirical question. We show that the discount function can be non-parametrically identified with contracts that specify payments that take place at various points in time in the future and which are traded and priced in a competitive market. We use a unique land lease-contract data set for Amsterdam, which has the above properties, to test for present bias in a flexible way. We find no evidence for present bias in this market. Even though we allow for a general-hyperbolic specification (which has exponential discounting as a special case), our estimates converge to an exponential discount function with a corresponding discount rate (in our baseline specification) of 8 %.present bias, hyperbolic discounting, discount rate, hedonic estimation

Hyperbolic Discounting of Public Goods

This article examines revealed rates of time preference for public goods, using environmental quality as the case study. A nationally representative panel-based sample of 2,914 respondents considered a series of 5 conjoint policy choices, yielding 14,570 decisions. Both the conditional fixed effect logit estimates of the random utility model and mixed logit estimates implied that the rate of time preference is very high for immediate improvements and drops off substantially thereafter, which is inconsistent with exponential discounting but consistent with hyperbolic discounting. The implied marginal rate of time preference declines and then rises. Estimates of the quasi-hyperbolic discounting parameter range from 0.48 to 0.61. People who are older are especially likely to have a high disutility from delays in improving water quality.