Looking ahead: subjective time perception and individual discounting

Bradford, W. David, Dolan, Paul and Galizzi, Matteo M. ORCID: 0000-0002-7757-5625 (2014) Looking ahead: subjective time perception and individual discounting. CEP Discussion Papers (CEPDP1255). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Time discounting is at the heart of economic decision-making. We disentangle hyperbolic discounting from subjective time perception using experimental data from incentive-compatible tests to measure time preferences, and a set of experimental tasks to measure time perception. The two behavioural parameters may be related to two factors that affect how we look ahead to future events. The first is that some component of time preferences reflect hyperbolic discounting. The second factor is that non-constant discounting may also be a reflection of subjective time perception: if people’s perception of time follows a near logarithmic process (as all other physiological perceptions such as heat, sound, and light do) then all existing estimates of individual discounting will be mis-measured and incorrectly suggest “hyperbolic” discounting, even if discounting over subjective time is constant. To test these hypotheses, we empirically estimate the two distinct behavioural parameters using data collected from 178 participants to an experiment conducted at the London School of Economics Behavioural Research Lab. The results support the hypothesis that apparent non-constant discounting is largely a reflection of subjective time perception.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information:	© 2014 The Authors
Divisions:	Social Policy Centre for Economic Performance
Subjects:	B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HC Economic History and Conditions H Social Sciences > HN Social history and conditions. Social problems. Social reform
JEL classification:	D - Microeconomics > D1 - Household Behavior and Family Economics D - Microeconomics > D1 - Household Behavior and Family Economics > D10 - General D - Microeconomics > D9 - Intertemporal Choice and Growth > D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
Date Deposited:	26 Nov 2014 12:30
Last Modified:	11 Dec 2024 19:15
Funders:	Economic and Social Research Council
URI:	http://eprints.lse.ac.uk/id/eprint/60265

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