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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  

W. Douglass Shaw

Texas A&M University

Therese C. Grijalva

Weber State University (WSU) - Department of Economics

Jayson L. Lusk

Oklahoma State University - Department of Agricultural Economics

Rong Rong

Weber State University (WSU)

Date Written: October 9, 2014

Abstract

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

Suggested Citation

Shaw, W. Douglass and Grijalva, Therese C. and Lusk, Jayson L. and Rong, Rong, Does the Convex Time Budget Approach Lead to Evidence of Hyperbolic Discounting When the Time Horizon is Very Long? (October 9, 2014). Available at SSRN: https://ssrn.com/abstract=2514056 or http://dx.doi.org/10.2139/ssrn.2514056

W. Douglass Shaw

Texas A&M University ( email )

Langford Building A
798 Ross St.
College Station, TX 77843-3137
United States

Therese C. Grijalva (Contact Author)

Weber State University (WSU) - Department of Economics ( email )

Ogden, UT 84408-3807
United States
801-626-7567 (Phone)
801-626-7423 (Fax)

HOME PAGE: http://faculty.weber.edu/tgrijalva

Jayson L. Lusk

Oklahoma State University - Department of Agricultural Economics ( email )

Stillwater, OK 74078-6026
United States
405-744-6161 (Phone)

Rong Rong

Weber State University (WSU) ( email )

3802 University Circle
Ogden, UT 84408
United States

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