Individual Time Preferences Research Articles

Impatience and crime. Evidence from the NLSY97

We empirically test the relationship between crime and impatience at the individual level, exploiting data from the National Longitudinal Survey of Youth 1997 (NLSY97). Besides providing information on violent, property, and drug crimes, NLSY97 allows us to observe different behaviors, sharing impatience as a common latent factor. We use factor analysis to extract this common factor as a measure of impatience. Estimates from a Logit model suggest a positive association between impatience and crime. This relationship differs across violent, property, and drug crimes, but we do not find significant heterogeneities when comparing individuals according to gender, parental education, and ethnic groups. The main result is robust to different factor analysis specifications and controls for risk preferences. Our findings support policies aimed at influencing individual time preferences as an indirect way to combat crime.

Fast-food consumption and individual time preferences in Russia: evidence for the social policy

PurposeThis article aims to investigate the role of socioeconomic factors and individual time preferences in the demand for fast-food in Russia. An individual discount rate shows the ability of a person to postpone utility from consumption to future periods.Design/methodology/approachAn individual discount rate is measured through a hypothetical money experiment. The database is the special survey of the Levada analytical center conducted in 2017. Multivariate probit model enables the authors to consider the possible endogeneity of individual discount rate and reveal the relationship between socioeconomic factors and frequent fast-food consumption.FindingsResults show that a higher individual discount rate is related to frequent consumption of fast-food. At the same time, there are factors that provoke both a higher individual discount rate and the refusal of frequent consumption of fast-food. Findings advise the prioritization of measures highlighting the short-term benefits of healthy eating and the short-term costs of avoiding it.Originality/valueTo the authors' knowledge, this article is the first one which presents comprehensive investigation of microeconomic factors of fast-food consumption in Russia including individual time preferences of consumers.

Who is chronically obese in Indonesia? The role of individual preferences.

Numerous studies have confirmed the relationship between individual risk and time preference and obesity. Nevertheless, none has studied the effect of these attitudes on chronic (long-term) obesity. This study used Indonesia Family Life Survey (IFLS) data from 16,366 individuals. It tracked their obesity status in 2007 and 2014 by calculating body mass index, the ratio between body weight and square of height. Besides the conventional risk-averse and risk-tolerant behaviour, the IFLS sample includes people who fear uncertainty related to the status quo bias. The ordered logit regression results show that past impatience, risk tolerance, and status quo bias behaviour (in 2007) are associated with transient or chronic obesity, while only current behaviour of status quo bias (in 2014) is associated with obesity. Furthermore, our study confirms that chronic obesity in Indonesia is prevalent among highly educated, high-income, and urban-centric individuals, exacerbated by impatience, risk tolerance, and uncertainty aversion. Thus, providing information on the risk of obesity and food calories, giving the incentive to avoid obesity, and improving the quality of built environments such as public parks, public transportation, and footpath could help prevent the rising obesity prevalence.

Beliefs and preferences as predictors of prophylactic adherence and lockdown compliance in South Africa

ABSTRACT Much of the research on behavioural preferences as predictors of compliance with regulations aimed at reducing the transmission of COVID-19 has focused on developed countries, with very little consideration of African countries. We conduct an online survey (n = 1503) considering beliefs, and individual and social preferences as predictors of compliance with prophylactic measures and lockdown regulations in South Africa. We use incentivized experimental measures of individual (risk and time) preferences and social preferences (cooperativeness and altruism). We also consider survey measures of risk tolerance, patience and trust. We find that beliefs about others’ behaviour are highly predictive of reported behaviour. We also find that greater patience and cooperativeness are predictive of high compliance with prophylactic measures and lockdown regulations. Encouragingly, respondents report higher compliance at higher lockdown levels, suggesting responsiveness of behaviour to the level of risk of infection.

Individual risk preference as a predictor of health behaviour: evidence from the use of condoms against HIV/AIDS in Ghana

BackgroundIt is evident that public health education interventions to promote the use of condoms against HIV infections in Ghana have yielded modest results. However, existing studies in the field of sexual and reproductive health in Ghana have failed to account for differences in risk preferences of individuals. This study fills the gap by investigating how individuals' risk preferences predict their behaviour toward using condoms against HIV in Ghana.MethodConceptually, the study followed the Grossman health capital theoretical model for risk preference and health behaviour nexus. Data were obtained from the most recent Ghana Living Standards Survey Round 7 (GLSS 7), conducted in 2017. Using data from GLSS 7, a probit regression model was estimated to show how the risk preferences of individuals that did not abstain from sex predicted their use of condoms against HIV. To ensure robustness, two scenarios of declared risk preferences were used to predict the use of condom behaviour against HIV.ResultsProbit regression estimation shows that the risk preferences of individuals that did not abstain from sex significantly predicted their use of condoms against HIV in Ghana. Even though the study found that the predicted probability of using a condom reduces among risk-averse individuals that do not abstain from sex, not using a condom against HIV was found to be worse among risk lovers.ConclusionThe study provides empirical evidence that public health education against HIV/AIDS in Ghana cannot continue to ignore the risk preference of individuals. The results of this study have immediate implications, first for a comprehensive and continuous measurement of risk preferences among Ghanaians in major household surveys going forward. At the moment, the latest round of the GLSS is just about the only household survey in Ghana that has attempted to collect some data on individual time and risk preferences using only hypothetical monetary rewards. Second is the immediate consideration of individual risk preferences in public health education campaigns against HIV/AIDS in Ghana.

Temporal discounting in later life

We explore intertemporal decision-making in later life by looking at temporal preference heterogeneity among older individuals. Using choice tasks responses from Poland collected as part of the Survey of Health, Ageing, and Retirement in Europe (SHARE), we elicit individual time preferences using competing discounting specifications. With the formulation that best fits our data, we examine which individual characteristics drive the estimated heterogeneity in later life time preferences. Individual numerical abilities, labour and marital status, as well as household income turn out to be significant correlates of patience. Our analysis also provides methodological guidance for instrument design with the aim of eliciting time preferences in a general survey setting.

Individual Time Preferences for Well-Being Allocation between Present and Future Generations

Despite the utopian nature of the socialist societies of the 20th century, the public legitimacy of temporarily sacrificing current prosperity for the sake of a better future remains a notable characteristic of a society’s potential for modernization. This study focuses on measuring individual discount rates for the reallocation of two experimental types of non-market merit goods in favor of future generations—“saved lives” and “healthy and prosperous life-years”. In the case of “saved lives”, the experimental situation inherits the logic of similar foreign research, while in the case of “healthy and prosperous life-years” the experimental situation departs from the theoretical foundations of similar foreign approaches, which use the category of “healthy and prosperous life-years” to solve problems in the field of healthcare economics. In our case, the experimental situation gives data about individual political and economic decisions of the price at which additional current well-being might be allocated for the sake of the future generations. In particular, it provides an analysis of intertemporal choice when respondents vote for one of two programs: the first, with a rentier effect, provides society with the above-mentioned goods immediately, but does not impact the well-being of future generations, while the second requires a rejection of additional prosperity in the present and postpones access to those goods for several decades, but eventually allows the society to receive the goods in larger amounts or for a longer period of time. It is shown that the discount rates for “saved lives” in Russia are higher than for Europe and the US in similar experiments and amount to 20.4% and 11.8% for time periods of 25 and 50 years, respectively. Discount rates were calculated for “healthy and prosperous life-years” (6.1% and 3.9% for the same time periods). It is also shown that the share of respondents who prefer present-oriented programs (the distribution of benefits in favor of those living today) for Russia exceeds 75%. The main motives of this orientation towards the redistribution of benefits in favor of the present, rather than future generations, are identified, among which the main ones are the current standard of living, the limited forecast horizon, the principle of generational self-responsibility, the scientific and technological revolution factor, and the “time loop” factor.

Drivers of smoking and physical activity in Russia: Do individual time preferences matter?

This article analyzes the relationship between individual decisions to smoke and to do physical exercises. It is assumed that individual time preferences play a major role in explaining individual health behavior. The database is the special survey of Russians’ lifestyle conducted in 2017. A multivariate probit model with endogenous binary variable enables to analyze the relationship between smoking, doing physical exercises, and individual time preferences. Individual time preferences are determined through a hypo­thetical money experiment. An individual discount rate is used as a proxy for the rate of time preferences. We reveal that there is a negative relationship between smoking and doing physical exercises because of unobservable factors. It might be an individual inclination to follow a healthy or unhealthy lifestyle. There is a negative influence of the higher individual discount rate on doing physical exercises and a positive in­fluence of the higher individual discount rate on smoking. Social policy should accentuate the short-term benefits from smoking cessation and regular physical exercises rather than probable future health improvements. For target groups with the higher individual discount rate, highlighting the short-term negative consequences of avoiding healthy behaviors will be more effective than drawing attention to future health risks.

Women's Choice for Their Offspring: Checking on Investment in Human Capital

This study aims to examine the relationship between women’s time preference as a factor of her decision-making and children’s education within their household. We estimate the Multinomial Logit model using data from 2014 survey from IFLS-5. We use responses to hypothetical choice questions which has inter-temporal tradeoffs available on the survey data to determine individual time preference. Tentative results suggest that more patient women invested more in their children’s education. The children have better educational attainment and health condition due to the mother’s household decision. The proxy of individual time preference is attained only from hypothetical questions in which related to financial gain instead of educational and health gain. Other arguments that may arises is we assume that the time preference of one individual never changed during their lifetime. This study would help in designing education and health policy especially for children.

The effects of chronotype on sexual satisfaction and quality of life in couples.

Physiological, psychological, and behavioral variables are under circadian regularity audit in humans. Chronotype describes an individual's time preference regarding mental/physical endeavors and represents the circadian rhythm's physiological expressions. This study aimed to investigate the effects of couples' chronotypes on their sexual satisfaction and quality of life. 228 heterosexual Turkish adults (114 females and 114 males with a mean age of 35.57 years and a standard deviation of 6.95 years), recruited from the general population, participated as 114 couples in this study. Demographic data were recorded. Chronotype assessment was made using the Morningness/Eveningness Questionaire. The quality of life (QOL) was scored using the World Health Organization-BREF scale. Sexual satisfaction was assessed using the Golombok-Rust Inventory of Sexual Satisfaction (GRISS) and the New Sexual Satisfaction Scale (NSSS). From morningness to intermediate and then to eveningness, the E-type females scored highest in the physical and psychological aspects of quality of life assessments. Regarding sexual satisfaction E-type females scored better than M-type and I-type females for most sub-scores and the overall score of GRISS. The couple/partner-centered sub-score and the overall NSSS score were highest in E-Type females. Chronotype similarity status affected QOL in females physically/psychologically, but not males. Sexual satisfaction was not significantly affected by couples' chronotype similarity. The individual's chronotype is a significant factor affecting the quality of life in the female gender and sexual satisfaction in both genders. However, the chronotype similarity status of the couple does not substantially affect the couple's quality of life and sexual satisfaction. We suggest that chronotype similarity is not essential for improving couples' quality of life and sexual satisfaction.

Culture and Institutions: Long-lasting effects of communism on risk and time preferences of individuals in Europe

Even three decades after the end of communism in Eastern Europe, there are still observable differences in financial risk and time preferences compared to Western Europe. Using data from two large-scale surveys – one including European countries (INTRA) and one for West and East Germany (SOEP) – we show that the causes of these differences are not the same: While differences in loss aversion and patience are most likely caused by deeply rooted cultural differences that date back even before communist times, other differences can be explained by experiences during the communist era and the transition processes that followed. These insights may also help to predict what differences are more likely to converge in the near future.

DETERMINANTS OF PHYSICAL ACTIVITY IN RUSSIA: THE ROLE OF INDIVIDUAL TIME PREFERENCES

Social policy includes such components as health care, education, physical activity, and sports, where the state acts not only as a financier, but also as a provider of services. Studying the determinants of physical activity makes it possible to identify the set of social policy measures aimed at the formation of a healthy lifestyle. Among the determinants of physical activity, there are socioeconomic characteristics of an individual, such as age, gender, health status, income level, marital and employment status. There is also an individual trend for a healthy lifestyle, or to refuse it, which was formed because of the influence of the environment, education, and personal beliefs. The purpose of this article is to examine the influence of individual time preferences on physical activity. Physical activity is monitored using physical exercises and walking indicators. The proxy for individual time preferences is individual discount rate. This rate is determined using a hypothetical money experiment. Individuals with a higher individual discount rate demonstrate impatience in obtaining utility from consumption. They are not ready to take health-improving actions. The study is carried out on the data of a special survey of the Levada Center dedicated to a healthy lifestyle of the Russian population in 2017. The main hypothesis is tested by estimating the system of binary equations. Individuals with higher individual discount rate are less likely to engage in physical exercises for health purposes. The findings provide additional information for the development of public policy measures aimed at creating healthy lifestyle.

Time and risk preferences of individuals, married couples and unrelated pairs

Humans make intertemporal decisions under uncertainty as individuals and in groups. Time and risk preferences are well studied in the context of individual decision-making, but much less attention has been paid to contexts of group decision-making, particularly married adults. Married couples often make important decisions jointly, such as decisions about household finances or children's education. We elicit the preferences of individuals, married couples, and unrelated pairs in an incentivized field experiment. By contrasting the choices of married couples and unrelated pairs of adults, we also shed light on whether divergences in choices between individuals and couples arise from attributes intrinsic to the married pair or from a “group effect”. We find that the decisions of both individuals and pairs are best characterized by rank-dependent utility with risk aversion and optimistic attitudes towards probabilities, high discount rates, and no present bias. The joint decisions of married couples and unrelated pairs exhibit more impatience than the constituent individuals’ decisions and this difference is similar for both types of pairs, implying only a “group effect” on time preferences. In contrast, the risk preferences of married couples and unrelated pairs are similar to the preferences of their constituent individuals.

Assessing risk attitudes and time preferences on the rural–urban interface of Bengaluru, India

PurposeUrbanization is a main driver of the transformation from agricultural-based economies to service-based economies. At the same time, urbanization might also alter preferences and attitudes such as risk and time preferences that contribute to economic growth and foster this transition. To study the effect of urbanization, few studies have compared individual time or risk preferences in rural and urban settings, reporting mixed results. This study analyses how risk and time preferences alter along the rural–urban interface and assesses the correlation of socio-economic, socio-cultural and demographic characteristics with these preferences. Using such an approach provides insights how preferences are altered in areas of transition as the rural–urban interface mirrors different stages of urbanization.Design/methodology/approachUsing experimental approaches, risk attitudes and time preferences of 1,117 agricultural and non-agricultural households were elicited along the rural–urban interface of the fast-developing Indian megacity Bengaluru in 2016/17. The study reports joint estimations of risk and time preferences and discusses the influence of urbanization on these preferences.FindingsResults show that households are on average slightly risk-averse and highly impatient. The results also indicate a decline in discount rates towards rural areas while risk preferences do not considerably differ between those areas. This puzzling result may be explained by difference response of rural and urban areas to the Demonetization policy of the Indian government in 2016.Originality/valueThe research design compares jointly estimated risk and time preferences of agricultural and non-agricultural households of a rapidly urbanizing area in a low-medium income country.

Risk and Time Preferences, Subjective Social Status, and Smoking Behaviors.

Objectives: In the context of rapidly developing economies, socioeconomic changes bring about increased inequality, lower perceived social status, stress, and depression, all of which contribute to the high incidence of smoking. In this study, we investigate the linkages between social status and smoking behaviors. Methods: Using data from Indonesia, we use regression analysis to study the roles of socioeconomic factors and individual risk and time preferences in determining smoking behaviors. Results: We find that both objective and perceived social status matter, but the role of perceived social status is orders of magnitude larger than that of objective social status measures, such as income or education. Conclusions: Whereas traditional policies focused on income or education can be effective in reducing smoking, our results suggest that much more can be achieved through policies that target inequality and socioeconomic stress.

Eliciting time preferences when income and consumption vary: Theory, validation & application to job search

We propose a simple method for eliciting individual time preferences without estimating utility functions even in settings where background consumption changes over time. It relies on lottery tickets with high rewards. In a standard intertemporal choice model high rewards decouple lottery choices from variation in background consumption. We validate our elicitation method experimentally on two student samples: one asked in December when their current budget is reduced by extraordinary expenditures for Christmas gifts; the other asked in February when no such extra constraints exist. We illustrate an application of our method with unemployed job seekers which naturally have income/consumption variation.

Eliciting Time Preferences When Income and Consumption Vary: Theory, Validation & Application to Job Search

We propose a simple method for eliciting individual time preferences without estimating utility functions even in settings where background consumption changes over time. It relies on lottery tickets with high rewards. In a standard intertemporal choice model high rewards decouple lottery choices from variation in background consumption. We validate our elicitation method experimentally on two student samples: one asked in December when their current budget is reduced by extraordinary expenditures for Christmas gifts; the other asked in February when no such extra constraints exist. We illustrate an application of our method with unemployed job seekers which naturally have income/consumption variation.

Delayed Gratification in Political Participation

Delayed gratification is associated with myriad desirable outcomes—like eating right and saving money. In this article, I explore whether it also increases political participation. To this end, I provide an explicit decision-theoretic framework, which predicts that less patient individuals are less willing to vote and to donate; these forms of participation are costly before Election Day, but their rewards are partially delayed. I then discuss how to elicit individual time preferences with real monetary incentives. In the empirical analysis, I provide evidence from a representative U.S. survey showing that monetary discount rates predict turnout and donations. Though mostly correlational and exploratory, these findings hold when controlling for a host of potential confounds. Overall, my results indicate that impatient types are less likely to prepare for and ultimately participate in elections. This sheds light on when and how deep psychological traits constrain political decisions involving a trade-off over time.

Retirement Ages by Socio-Economic Class

We are interested in defining the optimal retirement age by socio-economic class, given a Defined Benefit and a Notional Defined Contribution scheme. We firstly implement a utilitarian framework. Depending on the risk aversion coefficients and individual time preference factors, the results differ significantly. Since this approach is individualistic, with no consensus in the existing literature on what values these parameters should take, it is not suitable to be used by policy makers. Therefore, we provide an alternative based on two accounts. We look for the retirement age allowing the accumulated value, at the last age with survivors, of the pensions received under each system, held in one account, to be close in value to the accumulated amount should the actuarially fair pension be paid, representing the second account. Our approach results in setting a lower retirement age for lower socio-economic classes and a higher retirement age for wealthier individuals.

The Effect of Individual Time Preferences on Smoking Behavior: Insights from Behavioral Economics.

Background:We aimed to explore the correlation between the time and risk preferences and the smoking behavior of adult population in western Iran.Methods:Overall, 792 individuals with the age of 35 to 65 yr participating in an ongoing national cohort study (Persian Cohort) were approached to complete a pre-structured questionnaire in 2017. Time preferences were measured using a standard choice-based method. The individuals’ discount rates were identified by questions that offered binary monetary choices on immediate future and distant future, by making trade-offs between them. Probit regression model was used to investigate the relationship between time preferences and smoking when controlling for demographic and socioeconomic variables.Results:Time and risk preferences had statistically significant direct correlations with smoking. A unit increase in discount rate was associated with a 4.4% percentage point increase in the likelihood of being smoker. A present-biased individual had 5.7% percentage points lower likelihood of being smoker. Moreover, a unit increase in willingness to take the risk increased the likelihood of being a smoker by 1.5% percentage points.Conclusion:Time and risk preferences are important determinants of smoking behavior. These factors should be considered in designing effective prevention and control programs. Policies that increase the immediate costs of cigarette smoking or the immediate benefits of smoking cessation are likely to have a greater impact on reducing the prevalence of cigarette smoking.