Self‐Control Problems and Consumption‐Saving Decisions: Theory and Empirical Evidence
Arizona State University (ASU) - School of Global Studies
University of California, Berkeley - Department of Economics
Japanese Economic Review, Vol. 63, Issue 1, pp. 23-37, 2012
Time‐discounting is a fundamental preference which affects wealth accumulation. If people are impatient, they may spend their earnings instantaneously, and do not save enough for the future. People are often time‐inconsistent, i.e., they often put exceptionally high value on immediate consumption compared to any time in the future. Whether they are aware or not, these individuals are susceptible to self‐control problems. In this paper, we review theoretical and empirical research on time‐inconsistency and self‐control problems, particularly on consumption and saving, and discuss their policy implications.
Number of Pages in PDF File: 15
JEL Classification: D03, D14, O20Accepted Paper Series
Date posted: February 20, 2012
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