Exponential or Hyperbolic? Identifying and Testing the Predictive Power of Time Preference Over Unhealthy Behaviours

32 Pages Posted: 16 Aug 2016 Last revised: 7 Jan 2017

See all articles by Jianjun Tang

Jianjun Tang

Renmin University of China

W. George Hutchinson

Queen's University Belfast

Susan M. Chilton

University of Newcastle - Economics

Ruth Hunter

Queen's University Belfast

Morten I. Lau

Durham Business School

Frank Kee

Queen's University Belfast

Date Written: August 1, 2016

Abstract

It is crucial to more thoroughly understand discounting behaviour because it has important implications for designing interventions with financial incentives for behavioural change. This means examining discounting functional forms as well as discount rates and establishing their impacts across multiple as well as singular unhealthy behaviours. We provide a parametric specification test on the basis of a series of field experiments among 176 civil servants in Belfast, Northern Ireland. The results suggested that hyperbolic discounting performs better than exponential discounting and that the hyperbolic form which decomposes hyperbolic discounting into impatience and time-inconsistent discounting had the best fit. It is further revealed that obese smokers and non-obese smokers were more impatient with respect to financial rewards than the baseline group of non-obese non-smokers, whereas obese non-smokers did not show different discount rates than the baseline group. No correlation was found between the time-inconsistency nature of discounting and smoking and obesity.

Keywords: Hyperbolic discounting; Exponential discounting; Unhealthy behaviour; Economic field experiment

JEL Classification: C93 D90 I12

Suggested Citation

Tang, Jianjun and Hutchinson, W. George and Chilton, Susan M. and Hunter, Ruth and Lau, Morten Igel and Kee, Frank, Exponential or Hyperbolic? Identifying and Testing the Predictive Power of Time Preference Over Unhealthy Behaviours (August 1, 2016). Available at SSRN: https://ssrn.com/abstract=2823468 or http://dx.doi.org/10.2139/ssrn.2823468

Jianjun Tang (Contact Author)

Renmin University of China ( email )

59 Zhongguancun Ave
Beijing, 100872
China

HOME PAGE: http://www.sard.ruc.edu.cn/assistantprofessor/3266.jhtml

W. George Hutchinson

Queen's University Belfast ( email )

David Leir Building
Belfast, BT9 5AG
Ireland

Susan M. Chilton

University of Newcastle - Economics ( email )

Newcastle-upon-Tyne NE1 7RU
United Kingdom

Ruth Hunter

Queen's University Belfast ( email )

25 University Square
Belfast, BT7 1NN
Ireland

Morten Igel Lau

Durham Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

Frank Kee

Queen's University Belfast ( email )

25 University Square
Belfast, BT7 1NN
Ireland

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