Impatient in Experiments, But Patient in Simulations: A Challenge to the Heckman‐Type Model

23 Pages Posted: 9 Jun 2016

See all articles by Emin Gahramanov

Emin Gahramanov

American University of Sharjah - Department of Economics

Xueli Tang

Deakin University

Date Written: June 2016

Abstract

Intertemporal labour–leisure choice models typically assume agents have a very low degree of impatience. Yet there is a lot of empirical evidence indicating a high degree of impatience. Using a life‐cycle model of consumption–saving and labour–leisure choice, we show that even if an agent displays a relatively moderate degree of impatience, his labour supply choice delivers highly counterfactual patterns. We resolve this counterfactual finding by augmenting the standard model with a time‐dependent marginal utility of leisure assumption that is consistent with some recent evidences from leisure studies. We also introduce various extensions and discuss their relative importance and associated challenges.

Suggested Citation

Gahramanov, Emin and Tang, Xueli, Impatient in Experiments, But Patient in Simulations: A Challenge to the Heckman‐Type Model (June 2016). Economic Record, Vol. 92, Issue 297, pp. 268-290, 2016, Available at SSRN: https://ssrn.com/abstract=2792414 or http://dx.doi.org/10.1111/1475-4932.12244

Emin Gahramanov (Contact Author)

American University of Sharjah - Department of Economics ( email )

PO Box 26666
Sharjah
United Arab Emirates

Xueli Tang

Deakin University ( email )

75 Pigdons Road
Victoria, Victoria 3216
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
143
PlumX Metrics