Measures Of Time Preferences Research Articles

We Are All Behavioural, More, or Less: A Taxonomy of Consumer Decision-Making

Abstract We examine how 17 behavioural biases relate to each other, to three standard measures of risk and time preferences, to cognitive skills, personality, and demographics, and to outcomes in household finance, well-being, and health. Most consumers in our nationally representative panel data exhibit multiple biases, with substantial cross-person heterogeneity. Biases are positively correlated within person, especially after adjusting for measurement error. From that correlation structure, we reduce our 20 bias and standard preference measures to four behavioural common factors. Each BCF reflects a group of related biases regarding beliefs, decision quality, discounting, or risk/uncertainty attitudes. The first two BCFs also strongly correlate with each other (positively) and cognitive skills (negatively). The first three BCFs and cognitive skills strongly correlate with various outcomes in the expected directions. Our results support processing-based models where basic limitations in cognition and/or attention produce multiple biases, and they have several other implications for theory and practice.

Can hypothetical measures of time preference predict actual and incentivised behaviour? Evidence from Senegal.

Time preferences are an important determinant of decision-making and are widely measured through hypothetical survey questions. However, the extent to which they offer a good representation of time discounting remains largely unexplored. This paper estimates time preference parameters using a commonly-applied hypothetical elicitation method. We explore whether our estimated parameters correlate with actual and incentivized behaviours related to time preferences. First, we consider the correlation between our hypothetical measures and the result of an incentivised experiment using the unique reference numbers of banknotes as a means of determining an individual’s willingness to save money. Individuals are given a banknote and informed that if they chose to retain this specific note for a randomly assigned period of time (2, 7 or 14 days) they will receive a second banknote, in effect doubling their initial endowment. Second, we consider the correlation between hypothetical measures and an individual’s observable saving behaviour, including ownership of a savings account and participation in a Rotating Credit and Savings Association (ROSCA). Overall, our results show that hypothetically-derived time preference parameters are not significantly correlated with our measures of actual or incentivized behaviour. We explore the extent to which our results are due to limited power and find that a version of our results comparable to the relevant literature can detect effect sizes in line with similar studies. Furthermore, we recognise that our incentivized experiment will be a noisy reflection of time discounting and subject to confounding factors, such as the inherent fungibility of money. We provide ancillary evidence suggesting that our main results remain robust to these considerations and others.

Evaluation Scale or Output Format: The Attentional Mechanism Underpinning Time Preference Reversal.

Time preference reversals refers to systematic inconsistencies between preferences and valuations in intertemporal choice. When faced with a pair of intertemporal options, people preferred the smaller-sooner option but assign a higher price to the larger-later one. Different hypotheses postulate that the differences in evaluation scale or output format between the choice and the bid tasks cause the preference reversal. However, these hypotheses have not been distinguished. In the present study, we conducted a hybrid task, which shares the same evaluation scale with the bid task and shares the same output format with the choice task. By comparing these three tasks, we can figure out the key reason for time preference reversal. The eye-tracking measures reflecting attention allocation, cognitive effort and information search pattern were examined. Results showed that participants' time preference and eye-tracking measures in the hybrid task were similar to those in the choice task, but different from those in the bid task. Our findings suggest that the output format is the core reason for time preference reversal and may deepen our understanding of the mechanisms that underlie time preference reversal.

Selection into experiments: New evidence on the role of preferences, cognition, and recruitment protocols

We study selection into lab experiments based on data from two cohorts of first-year university students. We combine two experiments: a classroom experiment in which we elicit measures of time and risk preferences, overconfidence, trust, reciprocity, altruism, and cognitive reflection and a recruitment experiment with four treatment conditions that randomly vary the information provided in the e-mail sent to recruit lab participants. We find that students with higher cognitive skills are more likely to participate in experiments. By contrast, we find little evidence of selection along time and risk preferences, overconfidence, trust, and reciprocity, and our evidence of selection along altruism is inconclusive. In terms of recruitment conditions, mentioning financial incentives boosts the participation rate in lab experiments by 50 percent. Although recruitment conditions affect participation rates, they do not alter the composition of the participant sample in terms of the elicited characteristics. Finally, students who repeatedly participate in lab experiments are more patient than those who participate only once.

Present bias for monetary and dietary rewards

Economists model self-control problems through time-inconsistent preferences. Empirical tests of these preferences largely rely on experimental elicitation using monetary rewards, with several recent studies failing to find present bias for money. In this paper, we compare estimates of present bias for money with estimates for healthy and unhealthy foods. In a within-subjects longitudinal experiment with 697 low-income Chinese high school students, we find strong present bias for both money and food, and that individual measures of present bias are moderately correlated across reward types. Our experimental measures of time preferences over both money and foods predict field behaviors including alcohol consumption and academic performance.

Psychological correlates of free colorectal cancer screening uptake in a Scottish sample: a cross-sectional observational study

ObjectivesColorectal cancer (CRC) screening uptake in Scotland is 56%. This study examined whether psychological factors were associated with CRC screening uptake.DesignCross-sectional observational study.SettingThis study used data from the Healthy AGeing...

On the stability of risk and time preferences amid the COVID-19 pandemic.

We elicited incentivized measures of risk and time preferences from a sample of undergraduate students in Athens, Greece, in waves that preceded and overlapped with the COVID-19 pandemic. We exploited the timing of several events that occurred in the course of the pandemic (e.g., first occurrence of cases and deaths, curfew, relaxation of curfew etc.) and estimated structural parameters for various theories of risk and time preferences comparing these with pre-pandemic estimates. We find no effect between the different waves or other key events of the pandemic, despite the fact that we have about 1000 responses across all waves. Overall, our subjects exhibit intertemporal stability of risk and time preferences despite the significant effect of the COVID-19 pandemic on public health and the global economy.Supplementary InformationThe online version contains supplementary material available at 10.1007/s10683-021-09727-6.

Intertemporal stability of survey‐based measures of risk and time preferences

AbstractGiven the importance of risk and time preferences for economics and other disciplines, we seek to examine the intertemporal stability of six related survey‐based measures. Using a panel of subjects over three waves, between 2013 and 2015, we find aggregate and individual stability over the examined period for four of these measures (Patience, Risk, Risk Investment, and the Domain‐Specific Risk‐Taking scale) while only for Impulsiveness we observe significant patterns of instability, both individually and collectively. Our results contribute to the discussion on the wider adoption of survey‐based measures, especially considering the ease with which such measures can be incorporated in large‐scale surveys.

The relations between early-life stress and risk, time, and prosocial preferences in adulthood: A meta-analytic review

Abstract This meta-analytic review aims to address the mixed findings in previous research by quantifying the associations between early-life stress and risk, time, and prosocial preferences, and testing the boundary conditions of these associations. We meta-analyze 123 articles reporting 867 effect sizes among 199,019 adults to test different predictions from a life history perspective, a sensitization perspective, and an uncertainty management perspective about how early-life stress is associated with risk, time, and prosocial preferences. First, we find relatively small effect sizes indicating that early-life stress is associated with greater risk taking (r = .123), more present orientation (r = .126), and less prosociality (r = -.085), and its positive association with present orientation is stronger in currently stressful situations. Second, these observed associations do not vary significantly for harshness and unpredictability dimensions of early-life stress. Notably, moderation analyses across different types of preference measures only reveal an overall pattern of associations of early-life stress with self-report measures of risk, time, and prosocial preferences. By contrast, early-life stress is not significantly associated with risk preference or prosocial preference measured with hypothetical choice tasks or laboratory behavior tasks. Taken together, although the overall pattern of results supports a life history perspective, a cautious interpretation is warranted by the variation in the results across different preference measures and potential publication bias in the results. More pre-registered studies are needed to test the extent to which preferences measured with arbitrary laboratory-based tasks capture real-world behaviors and to increase the ecological validity of laboratory-based measures.

The role of heterogeneous risk preferences, discount rates, and earnings expectations in college major choice

We estimate a rich model of college major choice using a panel of experimentally-derived data. Our estimation strategy combines two types of data: data on self-reported beliefs about future earnings from potential human capital decisions and survey-based measures of risk and time preferences. We show how to use these data to identify a general life-cycle model, allowing for rich patterns of heterogeneous beliefs and preferences. Our data allow us to separate perceptions about the degree of risk or about the current versus future payoffs for a choice from the individual’s preference for risk and patience. Comparing our estimates of the general model to estimates of models which ignore heterogeneity in risk and time preferences, we find that these restricted models overstate the importance of earnings to major choice. Additionally, we show that while men are less risk averse and patient than women, gender differences in expectations about own-earnings, risk aversion, and patience cannot explain gender gaps in major choice.

Present Bias for Monetary and Dietary Rewards: Evidence from Chinese Teenagers

Economists model self-control problems through time-inconsistent preferences. Empirical tests of these preferences largely rely on experimental elicitation methods using monetary rewards, with several recent studies failing to find present bias for money. In this paper, we compare estimates of present bias for money with estimates for healthy and unhealthy foods. In a within-subjects longitudinal experiment with 697 low-income Chinese high school students we find strong present bias for both money and food, and that individual measures of present bias are moderately correlated across reward types. Our experimental measures of time preferences over money predict field behaviours better than preferences elicited over foods.

National Intelligence Is More Important for Explaining Country Well-Being than Time Preference and Other Measured Non-Cognitive Traits

Patient people fare better in life than impatient people. Based on this and on economic models, many economists have claimed that more patient countries should fare better than less patient countries. We utilize cross-national data in non-cognitive traits measured in the Global Preference Survey (GPS). This survey measured six non-cognitive traits — risk and time preferences, positive and negative reciprocity, altruism, and trust — across 76 countries in about 80,000 persons. As such, it provides the best current database of economics-focused non-cognitive traits. We combine this database with existing estimates of national intelligence (national IQs) and model country outcomes as a function of these predictors. For outcomes, we used the 51 national well-being indicators from the Social Progress Index (SPI) as well as the composite extracted from this, the general socioeconomic factor. We find that non-cognitive variables, time preference included, are only weakly predictive of national well-being outcomes when national IQs are also in the model. The median β across the indicators was 0.11 for time preference but 0.39 for national IQ. We replicated these results using six economic indicators, again with similar results: median βs of 0.15 and 0.52 for time preference and national IQ, respectively. Across all our results, we found that national IQ has 2-4 times the predictive validity of time preference. These results are fairly robust to inclusion of a spatial autocorrelation control, alternative measures of national IQ and time preference, or no controls. Our results suggest that the importance of national non-cognitive traits, including time preference, is overestimated or that these traits are mismeasured.

Present Bias for Monetary and Dietary Rewards: Evidence from Chinese Teenagers

Economists model self-control problems through time-inconsistent preferences. Empirical tests of these preferences largely rely on experimental elicitation methods using monetary rewards, with several recent studies failing to find present bias for money. In this paper, we compare estimates of present bias for money with estimates for healthy and unhealthy foods. In a within-subjects longitudinal experiment with 697 low-income Chinese high school students we find strong present bias for both money and food, and that individual measures of present bias are moderately correlated across reward types. Our experimental measures of time preferences over money predict field behaviours better than preferences elicited over foods.

Time preferences, diabetes self-management behaviours and outcomes: a systematic review.

Time preferences, i.e. individuals' degree of patience/impatience in intertemporal choice, have been found to be associated with suboptimal health behaviours and health outcomes such as smoking, physical inactivity, unhealthy food intake and obesity. In this systematic review, we aimed to synthesise reported associations between time preferences, diabetes self-management behaviours, including use of diabetes technology, and outcomes. We searched MEDLINE, EMBASE, PsycINFO, CINAHL, EconLit and all databases in the Web of Science Core Collection. Peer-reviewed studies of people with diabetes that included at least one diabetes-related behaviour or outcome and a measure of time preferences were included. Non-English language studies were excluded. A total of 961 records were identified, of which 12 articles were included. Three studies analysed both time-consistent and time-inconsistent preferences, three studies solely analysed time-inconsistent preferences and six studies did not explicitly define a time preference model. Measured outcomes across studies included self-care activities, such as medication-taking, exercising and eating a healthy diet, and biomedical outcomes, such as HbA1c and diabetes-related complications. There were 10 cross-sectional studies and two panel-data studies. No studies explicitly analysed the relationship between time preferences and diabetes technology use. Associations between measures of time preferences, diabetes self-management behaviours and clinical outcomes exist. Higher discount rates determined by both time-consistent and time-inconsistent models predict less diabetes-related self-care and worse outcomes. These findings may add to explanations of the observed variation in diabetes-related health and provide new insights for tailoring interventions and policies aimed at improving diabetes self-management.

The Economic Preferences of Cooperative Managers

A growing body of research has been investigating the role of management practices and managerial behaviour in conventional private firms and public sector organizations. However, little is known about managers' behavioural profile in noninvestor-owned firms. This paper aims to fill this gap by providing a comprehensive behavioural characterization of managers employed in cooperatives.We gathered incentive-compatible measures of risk preferences, time preferences, reciprocity, altruism, and trust from 196 Uruguayan managers (half of them employed in worker cooperatives) and 92 first-year undergraduate students. To do this, we conducted a high-stakes lab-in-the-field experiment in which participants played a series of online experimental games and made incentivised decisions. The average payoff in the experiment was approximately 2.5 times higher than the average local managerial wage in the private sector. Our key findings are that (1) the fraction of risk loving subjects is lower among co-op managers compared to conventional managers, and (2) co-op managers appear to be more altruistic than their conventional counterparts. Interestingly, we do not observe significant differences between the two groups across other preference domains, such as impatience, trust, and reciprocity.

The role of farmers’ trust, risk and time preferences for contract choices: Experimental evidence from the Ghanaian pineapple sector

We study the role of trust, risk and time preferences for farmers’ contract choices in a discrete choice experiment among Ghanaian pineapple farmers. We find that experimental measures of trust, risk and time preferences can predict preferences for contract attributes. Especially trust has economically important negative effects on the willingness to pay for high transparency in quality controls. Differences in preferences for timing of payment and timing of agreement making are partly explained by trust preferences and partly by time preferences. The importance of risk-sharing in form of lower quality grades accepted by the buyer increases with farmers’ risk-aversion, while risk preferences do not seem to be related to the timing of agreement making. Our results indicate that preferences affect farmers’ participation constraints and argue that a diversification of contract offers might increase the willingness of farmers to participate in contract farming. This has implications for companies who aim at developing stable long-term relationships with farmers.

Measuring Decreasing and Increasing Impatience

Many studies show that time preference data from experiments and surveys are related to field behavior. Time preference measures in these studies typically depend simultaneously on utility curvature, the level of impatience, and the change in the level of impatience. Thus, these studies do not allow one to establish which of these three components drive(s) the field behavior of interest. Of these components, the change in the level of impatience is theoretically thought to be the main driver of time inconsistencies and self-control problems. To test this theoretical presumption, one has to measure the change in the level of impatience independently from utilities and levels of impatience. This paper introduces a measure of the degree of decreasing impatience, the DI-index. It measures the change of impatience independently from the level of impatience and independently from utility. It can also be used to test various discounting models. An experiment finds no correlation between the degree of decreasing impatience and self-reported self-control problems in daily life, suggesting that changing impatience is not the sole driver of self-control problems. Data and the supplementary material are available at https://doi.org/10.1287/mnsc.2017.3015 . This paper was accepted by Manel Baucells, decision analysis.

Preferences, personality and health behaviors: results from an explorative economic experiment.

This research note analyzes the relationship between experimentally elicited, incentivized economic preference parameters, personality traits, and three health behaviors: smoking, drinking, and physical activity. While there is a strand of economic research that uses proxy measures of risk and time preference that are not derived from an incentivized experiment and personality traits at the same time, and a considerably smaller one that uses experimentally elicited measures of risk and time preference only, the innovation of my work is to use experimentally elicited, incentivized preference measures and personality traits at the same time to explain a range of health behaviors. Findings presented in this paper suggest that personality traits seem to be more important determinants of health behaviors than economic preference parameters, and that Big Five personality traits, especially Agreeableness, seem to be more important determinants than the Grit score developed by Duckworth et al. (J Pers Soc Psychol 92(6):1087, 2007). When also controlling for a host of personality traits, risk preference is not related to the analyzed behaviors, but time preference is negatively related to smoking. When controlling for economic preferences and Big Five personality traits, the Grit score is unrelated to the analyzed health behaviors. Big Five openness is negatively related to the probability of engaging in physical activity, while Big Five agreeableness is negatively related to the probability of both drinking and binge drinking, but also to the probability of engaging in physical activity. Big Five neuroticism is negatively related to the probability of binge drinking.

Which preferences associate with school performance?-Lessons from an exploratory study with university students.

Success in life is determined to a large extent by school performance so it is important to understand the effect of the factors that influence it. In this exploratory study, in addition to cognitive abilities, we attempt to link measures of preferences with outcomes of school performance. We measured in an incentivized way risk, time, social and competitive preferences and cognitive abilities of university students to look for associations between these measures and two important academic outcome measures: exam results and GPA. We find consistently that cognitive abilities (proxied by the Cognitive Reflection Test) are very well correlated with school performance. Regarding non-cognitive skills, we report suggestive evidence for many of our measured preferences. We used two alternative measures of time preference: patience and present bias. Present bias explains exam grades better, while patience explains GPA relatively better. Both measures of time preferences have a non-linear relation to school performance. Competitiveness matters, as students, who opt for a more competitive payment scheme in our experimental task have a higher average GPA. We observe also that risk-averse students perform a little better than more risk-tolerant students. That makes sense in case of multiple choice exams, because more risk-tolerant students may want to try to pass the exam less prepared, as the possibility of passing an exam just by chance is not zero. Finally, we have also detected that cooperative preferences—the amount of money offered in a public good game—associates strongly with GPA in a non-linear way. Students who offered around half of their possible amounts had significantly higher GPAs than those, who offered none or all their money.

Tat Will Tell: Tattoos and Time Preferences

Forty percent of Americans under the age of 40 have at least one tattoo. Yet survey and experimental evidence suggests that the tattooed are viewed negatively and may face discrimination in the labor market and in commercial transactions. In view of the potentially adverse economic consequences of a tattoo, the decision to get one may be regarded as short-sighted and impulsive. We collect numerous measures of time preferences and impulsivity of tattooed and non-tattooed subjects and find broad-ranging and robust evidence that those with tattoos, especially visible ones, are more short-sighted and impulsive than the non-tattooed. Almost nothing mitigates these results, neither the motive for the tattoo, nor the time contemplated before getting tattooed, nor the time elapsed since the most recent tattoo. Even the expressed intention to get a(nother) tattoo predicts increased short-sightedness and helps to pin down the direction of causality between tattoos and short-sightedness.