Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/91504
Authors: 
Bozio, Antoine
Laroque, Guy
O'Dea, Cormac
Year of Publication: 
2013
Series/Report no.: 
IFS Working Papers W13/02
Abstract: 
This paper suggests a method for estimating the distribution of discount rates using panel data on income and wealth. Using the English Longitudinal Survey of Ageing (ELSA), a representative sample of the English popularion over age 50, we general panel date on total consumption from the intertemporal budget constraint. The distribution of consumption levels is shown to closely match that estimated using the UK's household budget survey. Consumption transitions over time are then used to estimate the discount rates of households. We show that there is substantial heterogeneity in discounting behaviour and find that, among this older population, households with less education or numerical ability exhibit greater patience than those with higher education or numerical ability. The direction of this association is the opposite to that which has been found in experimental investigations of time preference.
Subjects: 
time preference
discount rate
heterogeneity
consumption
JEL: 
D12
D31
D91
E21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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