Empirical Determinants of Intertemporal Choice

52 Pages Posted: 2 Feb 2013

See all articles by Jeffrey R. Brown

Jeffrey R. Brown

University of Illinois at Urbana-Champaign - Department of Finance; National Bureau of Economic Research (NBER); University of Illinois College of Law; University of Illinois at Urbana-Champaign - Institute of Government and Public Affairs (IGPA); University of Illinois at Urbana-Champaign - Department of Economics

Zoran Ivkovich

Michigan State University, Department of Finance

Scott J. Weisbenner

University of Illinois at Urbana-Champaign - Department of Finance; National Bureau of Economic Research (NBER)

Date Written: February 2013

Abstract

We study the empirical determinants of intertemporal choice by analyzing a unique decision Croatian retirees made recently about whether to accept an immediate pension payment or a larger stream of delayed payments. Individual decisions are correlated in sensible ways with income, liquidity constraints, longevity expectations, and other covariates. Attitudes toward government also matter: those less confident that the government will honor its commitments are more likely to take the immediate stream of payments. Those who believe it is important to receive "the full amount due, no matter how long it takes" are substantially more likely to take the delayed payments.

Suggested Citation

Brown, Jeffrey R. and Ivkovich, Zoran and Weisbenner, Scott J., Empirical Determinants of Intertemporal Choice (February 2013). NBER Working Paper No. w18755. Available at SSRN: https://ssrn.com/abstract=2210774

Jeffrey R. Brown (Contact Author)

University of Illinois at Urbana-Champaign - Department of Finance ( email )

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University of Illinois College of Law ( email )

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University of Illinois at Urbana-Champaign - Institute of Government and Public Affairs (IGPA) ( email )

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University of Illinois at Urbana-Champaign - Department of Economics ( email )

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Zoran Ivkovich

Michigan State University, Department of Finance ( email )

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Scott J. Weisbenner

University of Illinois at Urbana-Champaign - Department of Finance ( email )

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