On the Aggregate Stability of Time Preferences

Hardardottir, HjördisLund University,Lunds universitet,Nationalekonomiska institutionen,Ekonomihögskolan,Department of Economics,Lund University School of Economics and Management, LUSEM (författare)

Working Paper / Department of Economics, School of Economics and Management, Lund University

We look at the stability of survey based subjective time preferences over time. Using data from a Dutch panel survey spanning the period 1998 to 2012, the stability of subjective time preferences at the aggregate level and at the individual level are studied. While aggregate preferences are clearly unstable, individual subjective time preferences are relatively stable over time. In order to shed light on the observed instability in aggregated time preferences we look at the relationship between the macroeconomic situation and time preferences. We find that for the sample as a whole patience is positively correlated with economic growth, but negatively correlated with income inequality. When studying how the estimations differ across income groups we observe that there is a considerable asymmetry in how different income groups react to changes in the macroeconomic situation.

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