Dynamic Consistency in Denmark: A Longitudinal Field Experiment

Glenn W. Harrison, Morten Lau, E. Elisabet Rutström

Publikation: Working paperForskning

Abstrakt

Evidence that individuals have dynamically consistent preferences is usually generated by studying the discount rates of the individual over different horizons, but where those rates are elicited at a single point in time. If these elicited discount rates vary by horizon, the individual is typically claimed to have preferences that imply a dynamic inconsistency, although this inference requires additional assumptions such as intertemporal separability. However, what one really wants to know is if the same subject has the same discount rate function when that individual is asked at a later point in time. Such panel tests then require that one allow for possible changes in the states of nature that the subject faces, since they may confound any in-sample comparisons of discount rate functions at different points in time. We report the results of a large-scale panel experiment undertaken in the field that allows us to examine this issue. In June 2003, we elicited subjective discount rates from 253 subjects, representative of the adult Danish population. Between September 2003 and November 2004, we re-visited 97 of these subjects and repeated these tasks. In each visit, we also elicited information on their individual characteristics, as well as their expectations about the state of their own economic situation and macroeconomic variables. We find evidence in favor of dynamic consistency.
OriginalsprogEngelsk
Udgivelses stedwww
UdgiverSSRN: Social Science Research Network
Antal sider59
StatusUdgivet - 2005
Udgivet eksterntJa
NavnUCF Economics Working Paper
Nummer05-02

Citationsformater

Harrison, G. W., Lau, M., & Rutström, E. E. (2005). Dynamic Consistency in Denmark: A Longitudinal Field Experiment. SSRN: Social Science Research Network. UCF Economics Working Paper, Nr. 05-02 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=698483