Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/225344
Authors: 
Kureishi, Wataru
Paule-Paludkiewicz, Hannah
Tsujiyama, Hitoshi
Wakabayashi, Midori
Year of Publication: 
2020
Series/Report no.: 
SAFE Working Paper 267
Abstract: 
We study whether and how time preferences change over the life cycle, exploiting representative long-term panel data. In order to disentangle age effects from cohort and period factors, we estimate individual fixed-effects models, substituting period effects with period specific determinants of time preferences. We find that discount rates linearly decrease over the life cycle. This pattern holds when adjusting for the curvature of the utility function. We show the quantitative importance of this finding by demonstrating that a canonical life-cycle model with decreasing discounting significantly improves its fit to consumption and asset data relative to the model with constant discounting.
Subjects: 
Time Preferences
Preference Stability
Age
Discount Rates
JEL: 
D01
D12
D91
J10
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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