Is There a Daily Discount Rate? Evidence from the Food Stamp Nutrition Cycle

40 Pages Posted: 27 Dec 2003

See all articles by Jesse M. Shapiro

Jesse M. Shapiro

Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: November 20, 2003

Abstract

Quasi-hyperbolic discounting predicts impatience over short-run tradeoffs. I present a direct non-laboratory test of this implication using data on the nutritional intake of food stamp recipients. Caloric intake declines by 10 to 15 percent over the food stamp month, implying a significant preference for immediate consumption. These findings constitute a rejection of the permanent income hypothesis and are extremely difficult to reconcile with exponential discounting. The data support an explanation based on time preference and reject several alternative explanations, including highly elastic intertemporal substitution. I explore implications for the optimal timing of transfer payments under alternative assumptions about preferences.

Keywords: Food stamps, time preference, discounting

JEL Classification: D91, E21, I38

Suggested Citation

Shapiro, Jesse M., Is There a Daily Discount Rate? Evidence from the Food Stamp Nutrition Cycle (November 20, 2003). Available at SSRN: https://ssrn.com/abstract=480161 or http://dx.doi.org/10.2139/ssrn.480161

Jesse M. Shapiro (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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