Time discounting and economic decision-making in the older population

TitleTime discounting and economic decision-making in the older population
Publication TypeJournal Article
Year of PublicationForthcoming
AuthorsHuffman, D, Maurer, R, Mitchell, OS
JournalThe Journal of the Economics of Ageing
ISSN Number2212828X
KeywordsDecision making, Retirement Planning and Satisfaction, Self-control
Abstract

This paper examines heterogeneity in time discounting among a representative sample of elderly Americans, as well as its role in explaining key economic behaviors at older ages. We show how older Americans evaluate simple (hypothetical) inter-temporal choices in which payments today are compared with payments in the future. Using the indicators derived from this measure, we then demonstrate that differences in discounting patterns are associated with characteristics of particular importance in elderly populations. For example, cognitive deficits are associated with greater impatience, whereas bequest motives are associated with less impatience. We then relate our discounting measure to key economic outcomes and find that impatience is associated with lower wealth, fewer investments in health, and less planning for end of life care.

URLhttp://www.sciencedirect.com/science/article/pii/S2212828X16300457
DOI10.1016/j.jeoa.2017.05.001
Short TitleThe Journal of the Economics of Ageing
Citation Key9093