Does the Convex Time Budget Approach Lead to Evidence of Hyperbolic Discounting When the Time Horizon is Very Long?
10 Pages Posted: 24 Oct 2014
Date Written: October 9, 2014
We employ the convex time budget approach in a laboratory experiment to measure individual discount rates for time horizons that are longer (5, 10, and 20 years) than what is typically explored in previous literature. We reject hyperbolic discounting in favor of constant discount rates and because of the long time horizon, the average discount rate of 1.9% is much lower than the rates typically found in empirical estimation of individual discount rates.
Keywords: Discount rate, Convex time budgets, Hyperbolic discounting
JEL Classification: D90, Q50
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