|Title||Time discounting and economic decision-making among the elderly|
|Year of Publication||2016|
|Authors||Huffman, D, Maurer, R, Mitchell, OS|
|Series Title||NBER Working Paper Series|
|Document Number||Working Paper No. 22438|
|Institution||National Bureau of Economic Research|
|Keywords||Decision making, Health Conditions and Status, Older Adults|
This paper evaluates the extent of heterogeneity in time discounting among elderly Americans, as well as its role in explaining older peoples' key behaviors. We first show how older Americans evaluate simple (hypothetical) intertemporal choices in which payments now are compared with payments in the future. This adds to the literature on time horizon experiments by focusing on a nationally representative sample of persons age 70+. Using the indicators derived from this experiment, we show how differences in discounting patterns are associated with characteristics of particular importance in elderly populations, such as serious health and mental conditions. We then relate our discounting measure to key outcome variables including wealth, the timing of retirement, investments in health, and decisions about end of life care.