Time Preference and the Importance of Saving for Retirement

31 Pages Posted: 28 Feb 2006 Last revised: 13 Mar 2013

Date Written: May 2, 2012


This study models the importance respondents place on saving for retirement as a function of time preference using a sample of 6,812 undergraduate and graduate students. Individual time preference is measured by comparing dollar values over time and through a combination of intertemporal behaviors that may be the most theoretically appropriate measurement of the discount rate for utility over time. Results show strong correlations among decision making domains that involve time discounting. Time preference measured by comparing dollar amounts across time proves a much weaker predictor than a combination of intertemporal behaviors measured either as a linear scale or as factors. In multivariate models, a factor of intertemporal preventive health behaviors is a stronger predictor of the importance of saving for retirement than all other explanatory variables including age, race, parental income, gender, GPA, and college major.

Keywords: Time discounting, time preference, retirement saving, behavioral finance

JEL Classification: D91, I12

Suggested Citation

Finke, Michael S. and Huston, Sandra J., Time Preference and the Importance of Saving for Retirement (May 2, 2012). Available at SSRN: https://ssrn.com/abstract=886554 or http://dx.doi.org/10.2139/ssrn.886554

Michael S. Finke (Contact Author)

The American College ( email )

Bryn Mawr, PA 19010
United States

Sandra J. Huston

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

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