Time Discounting and Wealth Inequality

Thomas Epper; Ernst Fehr; Helga Duda-Fehr; Claus Thustrup Kreiner; David Dreyer Lassen; Søren Leth-Petersen; Gregers Nytoft Rasmussen

Time Discounting and Wealth Inequality

Thomas Epper, Ernst Fehr, Helga Duda-Fehr, Claus Thustrup Kreiner, David Dreyer Lassen, Søren Leth-Petersen, Gregers Nytoft Rasmussen

Abstract

This paper documents a large association between individuals’ time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory.

Originalsprog	Engelsk
Udgiver	CEBI, Center for Economic Behavior and Inequality, Department of Economics, Unversity of Copenhagen
Antal sider	66
Status	Udgivet - aug. 2019

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https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_08-19.pdf

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abstract = "This paper documents a large association between individuals{\textquoteright} time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory.",

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AU - Epper, Thomas

AU - Fehr, Ernst

AU - Duda-Fehr, Helga

AU - Kreiner, Claus Thustrup

AU - Lassen, David Dreyer

AU - Leth-Petersen, Søren

AU - Rasmussen, Gregers Nytoft

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N2 - This paper documents a large association between individuals’ time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory.

AB - This paper documents a large association between individuals’ time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory.

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KW - experimental methods

KW - administrative data

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PB - CEBI, Center for Economic Behavior and Inequality, Department of Economics, Unversity of Copenhagen

ER -

Time Discounting and Wealth Inequality

Abstract

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