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The prevalence of hyperbolic discounting: some European evidence

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Abstract:

Experimental matching data are used from the 2000 Bank of Italy Survey of Household Income and Wealth (SHIW) and the 2000 wave of the Center for Economic Research (CentER) Savings Survey at Tilburg University to compare the relative frequencies of hyperbolic and exponential discounters. Among 3200 Italian respondents and 1400 Dutch respondents, less than a quarter exhibited hyperbolic discounting. This finding is both statistically significant and robust with respect to various assumptions regarding utility; moreover, it holds across a wide variety of economic, social and demographic characteristics. The youngest, poorest, most urban and least educated individuals are the most likely to be hyperbolic discounters. In addition, it is found that hyperbolic discounters accumulate less wealth and are somewhat less likely than exponential discounters to utilize commitment devices to constrain their future choices.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840500392391

Affiliations: 1: Department of Economics and Finance, Canisius College, 2001 Main St., Buffalo, NY 140208-1098, USA 2: Dipartimento di Scienze Economiche, Universita di Roma “La Sapienza”, Via Cesalpino 12-14, I-00161, Roma, Italy

Publication date: June 20, 2006

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