Time Compression

CAMA Working Paper No. 28/2012

36 Pages Posted: 12 Jun 2012

See all articles by David Aadland

David Aadland

University of Wyoming

Sherrill Shaffer

University of Wyoming

Date Written: June 2012

Abstract

Economists have generally ignored the notion that perceived time may differ from clock time. Borrowing from the behavioral psychology literature, we investigate the case of time compression whereby perceived time passes more quickly than actual time. A framework is presented to embed time compression in economic models. We then apply the principle to a standard lifecycle permanent income model with endogenous labor. Time compression provides an alternative explanation of why older individuals, even those without declining labor productivity, may choose to reduce their work effort.

Keywords: Time Compression, Discounting, Lifecycle Permanent Income Model, Retirement

JEL Classification: D03, D91

Suggested Citation

Aadland, David and Shaffer, Sherrill, Time Compression (June 2012). CAMA Working Paper No. 28/2012. Available at SSRN: https://ssrn.com/abstract=2083368

David Aadland

University of Wyoming ( email )

Box 3434 University Station
Laramie, WY 82070
United States

HOME PAGE: http://www.uwyo.edu/aadland/

Sherrill Shaffer (Contact Author)

University of Wyoming ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States
307-766-2173 (Phone)
307-766-5090 (Fax)

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