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Long term stability of time preferences and the role of the macroeconomic situation
Affiliation:1. Learning Research and Development Center, University of Pittsburgh, 3939 O’Hara Street, Pittsburgh, PA 15260, United States;2. The University of Chicago Booth School of Business, 5807 South Woodlawn Ave, Chicago, IL 60637, United States;1. Victoria University of Wellington, Pipitea Campus, Lambton Quay, Wellington, New Zealand;2. Frankfurt School of Finance & Management, Adickesallee 32-34, 60322 Frankfurt, Germany;1. School of Business Administration, The College of Management Academic Studies, 7 Rabin Ave., Rishon-Le’Zion, Israel;2. School of Management, Ben-Gurion University, Beer-Sheva 84105, Israel;3. School of Management, Tel-Aviv University, Tel-Aviv, Israel;1. Deutsche Bundesbank, Wilhelm-Epstein-Straße 14, 60431 Frankfurt am Main, Germany;2. IRES, Université Catholique de Louvain, Belgium;3. CentER, Tilburg University, Netherlands;1. Department of Economics, University of Arizona, United States;2. Department of Economics, University of Gothenburg, Sweden;3. CESifo, Munich, Germany;4. University of Arizona College of Medicine, United States;1. Health Economics Research Unit, University of Aberdeen, Polwarth Building, Foresterhill, Aberdeen, AB25 2ZD, UK;2. Department of Economics, University of Aberdeen, Edward Wright Building, Dunbar Street, AB24 3QY, UK
Abstract:We look at the stability of survey based subjective time preferences over time using data from a Dutch panel survey with a long time horizon and find that the ranking of individual time preferences is stable. Simple observation of the aggregated measured time preferences reveals instability in aggregated preferences. In order to shed light on this instability we look at the relationship between the individual socio-economic situation and time preferences and the macroeconomic situation and time preferences. While we find no clear relationship between socio-economic situation and time preferences, we find that for the sample as a whole patience is positively correlated with economic growth, but negatively correlated with income inequality. When studying how the estimations differ across income groups we observe that there is a considerable asymmetry in how different income groups react to changes in the macroeconomic situation.
Keywords:Time preferences  Stability of preferences  Income inequality  Economic growth  Socially determined preferences
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