We put forward a method for estimating discount rates using wealth and income data. We build consumption from these data using the budget constraint. Consumption transitions yield discount rates by household groups. Applying this technique to a sample of older households, we find a similar distribution to those previously estimated using field data, though with a much lower mean than those found using experiments. Surprisingly, among this older population, patience is negatively correlated with education and numeracy. This goes against the positive correlation found for younger populations in experiments and some field studies. We discuss potential explanations for this result.
Authors
Guy Laroque
Research Fellow Paris School of Economics
Antoine is a Research Fellow, an Associate Professor at the EHESS, and Director of the Institut des Politiques Publiques (IPP) in Paris.
Research Associate Yale University
Cormac is a Research Associate of the IFS, an Assistant Professor of Economics at the Yale University and Research Fellow at the NBER.
Journal article details
- DOI
- 10.1007/s00148-016-0623-y
- Publisher
- Springer
- JEL
- D12D31D91E21
- Issue
- Volume 30, Issue 2, April 2017
Suggested citation
A, Bozio and G, Laroque and C, O'Dea. (2017). 'Discount rate heterogeneity among older households: a puzzle?' 30, Issue 2(2017)
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