Looking Ahead: Subjective Time Perception and Individual Time Discounting

53 Pages Posted: 20 Dec 2013

See all articles by W. David Bradford

W. David Bradford

University of Georgia - Department of Public Administration and Policy; University of Georgia - Department of Economics

Paul Dolan

London School of Economics & Political Science (LSE)

Matteo M Galizzi

London School of Economics & Political Science (LSE)

Date Written: December 19, 2013

Abstract

Time discounting is at the heart of economic decision-making. We disentangle hyperbolic discounting from subjective time perception using experimental data from incentive-compatible tests to measure time preferences, and a set of experimental tasks to measure time perception. The two behavioral parameters may be related to two factors that affect how we look ahead to future events. The first is that some component of time preferences reflect hyperbolic discounting. The second factor is that non-constant discounting may also be a reflection of subjective time perception: if people’s perception of time follows a near logarithmic process (as all other physiological perceptions such as heat, sound, and light do) then all existing estimates of individual discounting will be mis-measured and incorrectly suggest “hyperbolic” discounting, even if discounting over subjective time is constant. To test these hypotheses, we empirically estimate the two distinct behavioral parameters using data collected from 178 participants to an experiment conducted at the London School of Economics Behavioural Research Lab. The results support the hypothesis that apparent non-constant discounting is largely a reflection of subjective time perception.

Keywords: time preferences, time perception, hyperbolic discounting

JEL Classification: D1, D10, D91

Suggested Citation

Bradford, W. David and Dolan, Paul and Galizzi, Matteo M, Looking Ahead: Subjective Time Perception and Individual Time Discounting (December 19, 2013). Available at SSRN: https://ssrn.com/abstract=2369916 or http://dx.doi.org/10.2139/ssrn.2369916

W. David Bradford (Contact Author)

University of Georgia - Department of Public Administration and Policy ( email )

Athens, GA 30602-6254
United States

University of Georgia - Department of Economics ( email )

Athens, GA 30602-6254
United States

Paul Dolan

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Matteo M Galizzi

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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