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Journal of Financial Economics Vol. 116 No. 3 2015

Empirical determinants of intertemporal choice

Jeffrey R. Brown1,2; Zoran Ivković3; Scott Weisbenner1,2

1 National Bureau of Economic Research · 2 University of Illinois Urbana-Champaign · 3 Michigan State University

Abstract

We provide new evidence on the empirical determinants of intertemporal financial decisions. We use an exogenously imposed choice affecting nearly all Croatian retirees to study characteristics associated with choosing a larger, deferred stream of payments over a smaller, more immediate payment. Individuals are more willing to defer if they have higher incomes and are not liquidity constrained, have a longer time horizon because of better health and longer life expectancy, and have stronger bequest motives. Individuals who expect currency devaluation or political risk to reduce the value of future income are more likely to take the earlier income stream.

DOI
10.1016/j.jfineco.2015.04.004
Volume
116
Issue
3
Pages
473-486
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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