- E-ISSN2233-5382
- KCI
E-ISSN : 2233-5382
The Influencing of Aging on Time Preference in Indonesia
Abstract
Purpose: The influence of age on time preference is not identified in the usual cross-sectional analysis. This study aims to test whether age affects time preference after controlling for the effects of individual heterogeneity including cohort effects. Research design, data and methodology: Drawing on a nationally representative panel dataset of Indonesians, we estimate the effects of age on time preference after controlling for unobserved individual heterogeneity as well as potential cohort effects. We measure time preference exploiting information on two sets of multiple price lists: one for a one-year delay, and the other for a five-year delay. Results: When we controlled for time-invariant individual characteristics, including birth cohort effects in a fixed effects model, the older men and women were more patient in a linear fashion, particularly when the delay was longer. To highlight the importance of controlling for individual fixed effects, we repeated the specification without controlling for individual fixed effects in OLS or censored maximum likelihood regression; we found no relation between age and impatience in men or women and for a one or five-year delay. Conclusions: The older men and women are more patient, and time preferences are correlated with unobserved individual heterogeneity.
- keywords
- Impatience, Time Preference, Discounting, Age, Indonesia
Reference
Andreoni, J., & Sprenger, C. (2012). Risk preferences are not time preferences. American Economic Review, 102(7), 3357-3376.
Becker, G. S., & Mulligan, C. B. (1997). The endogenous determination of time preference. Quarterly Journal of Economics, 112(3), 729-758.
Benjamin, D. J., Choi, J. J., & Fisher, G. (2016). Religious identity and economic behavior. Review of Economics and Statistics 98(4), 617-637.
Bishai, D. M. (2004). Does time preference change with age? Journal of Population Economics, 17(4), 583-602.
Callen, M. (2015). Catastrophes and time preference: Evidence from the Indian Oean Earthquake. Journal of Economic Behavior and Orgnization, 118(Oct), 199-214.
Coller, M., & Williams, M. B. (1999). Eliciting individual discount rates. Experimental Economics, 2(2), 107-127.
Epper, T., Fehr-Duda, H., & Schubert, R. (2011). Energy-using durables: The role of time discounting in investment decisions (IED Working Paper 16). Institute for Environmental Decisions. Zurich.
Finke, M., & Huston, S. (2013). Time preference and the importance of saving for retirement. Journal of Economic Behavior and Organization, 89(May), 23-34.
Frederick, S., Loewenstein, G., & O'donoghue, T. (2002). Time discounting and time preference: A critical review. Journal of Economic Literature, 40(2), 351-401.
Friehe, T., & Pannenberg, M. (2020). Time preference and political regimes: Evidence from reunified germany. Journal of Population Economics 33(1), 349-387.
Galor, O., & Ö zak, Ö . (2016). The agricultural origins of time preference. American Economic Review, 106(10), 3064-3103.
Golsteyn, B. H. H., Grönqvist, H., & Lindahl, L. (2014). Adolescent time preferences predict lifetime outcomes. Economic Journal, 124(580), F739-F761.
Green, L., Fry, A. F., & Myerson, J. (1994). Discounting of delayed rewards: A life-span comparison. Psychological Science, 5(1), 33-36.
Green, L., Myerson, J., Lichtman, D., Rosen, S., & Fry, A. (1996). Temporal discounting in choice between delayed rewards:The role of age and income. Psychology and Aging, 11(1), 79-84.
Harrison, G. W., Lau, M. I., & Williams, M. B. (2002). Estimating individual discount rates in Denmark: A field experiment. American Economic Review, 92(5), 1606-1617.
Jimura, K., Myerson, J., Hilgard, J., Keighley, J., Braver, T. S., & Green, L. (2011). Domain independence and stability in young and older adults' discounting of delayed rewards. Behavioural Processes, 87(3), 253-259.
Johnson, M. W., & Bickel, W. K. (2002). Within‐subject comparison of real and hypothetical money rewards in delay discounting. Journal of the Experimental Analysis of Behavior, 77(2), 129-146.
Keidel, K., Rramani, Q., Weber, B., Murawski, C., & Ettinger, U.(2021). Individual Differences in Intertemporal Choice. Frontiers in Psychology, 16(April), 643-670.
Lawrence, E. C. (1991). Poverty and the rate of time preference:Evidence from panel data. Journal of Political Economy 99(1), 54-77.
Löckenhoff, C. E., O'Donoghue, T., & Dunning, D. (2011). Age differences in temporal discounting: The role of dispositional affect and anticipated emotions. Psychology and Aging, 26(2), 274-284.
Madden, G. J., Begotka, A. M., Raiff, B. R., & Kastern, L. L.(2003). Delay discounting of real and hypothetical rewards. Experimental and Clinical Psychopharmacology, 11(2), 139-145.
Olsen, J. A. (1993). Time preferences for health gains: An empirical investigation. Health Economics, 2(3), 257-265.
Read, D., & Read, N. L. (2004). Time discounting over the lifespan. Organizational Behavior and Human Decision Processes, 94(1), 22-32.
Reimers, S., Maylor, E. A., Stewart, N., & Chater, N. (2009). Associations between a one-shot delay discounting measure and age, income, education and real-world impulsive behavior. Personality and Individual Differences, 47(8), 973-978.
Richter, D., & Mata, R. (2018), Age differences in intertemporal choice: U-shaped associations in a probability sample of German households. Psychology and Aging, 33(5), 782-788.
Rogers, A. R. (1994). Evolution of time preference by natural selection. American Economic Review, 84(3), 460-481.
Sohn, K. (2014). A note on the effects of education on youth smoking in a developing country. Journal of the Asia Pacific Economy, 19(1), 66-73.
Sohn, K. (2016). Risk incomprehension and its economic consequences. Journal of Development Studies, 52(11), 1545-1560.
Sohn, K. (2017). The risk preferences of entrepreneurs in Indonesia. Bulletin of Economic Research, 69(3), 271-287.
Sozou, P. D., & Seymour, R. M. (2003). Augmented discounting:Interaction between ageing and time-preference behaviour. Proceedings of the Royal Society B: Biological Sciences, 270(1519), 1047-1053.
Tanaka, T., Camerer, C. F., & Nguyen, Q. (2010). Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam. American Economic Review, 100(1), 557-571.
Trostel, P. A., & Taylor, G. A. (2001). A theory of time preference. Economic Inquiry, 39(3), 379-395.
van der Pol, M. (2012). Health, education and time preference. Health Economics, 20(8), 917-929.
van der Pol, M., Walsh, D., & McCartney, G. (2015). Comparing time and risk preferences across three post-industrial UK cities. Social Science and Medicine, 140(Sep), 54-61.
Whelan, R., & McHugh, L. A. (2009). Temporal discounting of hypothetical monetary rewards by adolescents, adults, and older adults. Psychological Record, 59(2), 247-258.
Yoon, H. (2020). Impatience and time inconsistency in discounting models. Management Science, 66(12), 5850-5860.
Želinský, T. (2021). Intertemporal Choices of Children and Adults from Poor Roma Communities: A Case Study from Slovakia. Eastern European Economics, 59(4), 378-405.
- Downloaded
- Viewed
- 0KCI Citations
- 0WOS Citations