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Measuring Time Preferences

Jonathan D. Cohen¹; Keith M. Marzilli Ericson²; David Laibson³; John Myles White¹

¹ Princeton University · ² Boston University Questrom School of Business and NBER. · ³ NBER and Harvard University.

We review research that measures time preferences-i.e., preferences over intertemporal tradeoffs. We distinguish between studies using financial flows, which we call "money earlier or later" (MEL) decisions and studies that use time-dated consumption/effort. Under different structural models, we show how to translate what MEL experiments directly measure (required rates of return for financial flows) into a discount function over utils. We summarize empirical regularities found in MEL studies and the predictive power of those studies. We explain why MEL choices are driven in part by some factors that are distinct from underlying time preferences.

DOI

10.1257/jel.20191074

Volume

58 (2)

Pages

299-347

Language

en

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