The hyperbolic consumption model: Calibration, simulation, and empirical evaluation

Time and Decision: Economic and Psychological Perspectives on Intertemporal Choice

Volumn , Issue , 2003, Pages 517-543

  Angeletos, George Marios ^a   Laibson, David ^b   Repetto, Andrea ^c   Tobacman, Jeremy ^b   Weinberg, Stephen ^b  

^a MASSACHUSETTS INSTITUTE OF TECHNOLOGY   (United States)

^b HARVARD UNIVERSITY   (United States)

^c UNIVERSITY OF CHILE   (Chile)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84988680233     PISSN: None     EISSN: None     Source Type: Book    
DOI: None     Document Type: Chapter

References (80)

1. Ainslie, George. 1992. Picoeconomics. Cambridge: Cambridge University Press. Akerlof, George A. 1991. "Procrastination and Obedience." American Economic Review (Papers and Proceedings) 81: 1-19.
2. Altonji, Joseph, and Aloysius Siow. 1987. "Testing the Response of Consumption to Income Changes with (Noisy) Panel Data." Quarterly Journal of Economics 102(2): 293-328.
3. Angeletos, George-Marios, David Laibson, Andrea Repetto, Jeremy Tobac- man, and Stephen Weinberg. 2001. "The Hyperbolic Buffer Stock Model: Calibration, Simulation, and Empirical Evaluation." Working paper. National Bureau of Economic Research.
4. Attanasio, Orazio. 1999. "Consumption." In Handbook of Macroeconomics, edited by John Taylor and Michael Woodford. North Holland: Elsevier.
5. Attanasio, Orazio, and Guglielmo Weber. 1993. "Consumption Growth, the Interest Rate, and Aggregation." Review of Economic Studies 60(3): 631-49.
6. Attanasio, Orazio, and Guglielmo Weber. 1995. "Is Consumption Growth Consistent with Intertemporal Optimization? Evidence from the Consumer Expenditure Survey." Journal of Political Economy 103(6): 1121-57.
7. Banks, James, Richard Blundell, and Sarah Tanner. 1998. "Is There a Retirement Puzzle?" American Economic Review 88: 769-88.
8. Barro, Robert J. 1999. "Laibson Meets Ramsey in the Neoclassical Growth Model." Quarterly Journal of Economics 114(4): 1125-52.
9. Barro, Robert J., and David B. Gordon. 1983. "A Positive Theory of Monetary Policy in a Natural Rate Mechanism." Journal of Political Economy 91(4): 589610.
10. Benabou, Roland, and Jean Tirole. 2000. "Willpower and Personal Rules." Mimeograph, Princeton University/University of Toulouse.
11. Bernheim, B. Douglas. 1995. "Do Households Appreciate Their Financial Vulnerabilities? An Analysis of Actions, Perceptions, and Public Policy." In Tax Policy for Economic Growth in the 1990s (1-30). Washington, D.C.: American Council for Capital Formation.
12. Bernheim, B. Douglas, Jonathan Skinner, and Steven Weinberg. 1997. "What Accounts for the Variation in Retirement Wealth Among U.S. Households?" Working paper no. 6227. Cambridge, Mass.: National Bureau of Economic Research.
13. Blundell, Richard, Martin Browning, and Costas Meghir. 1994. "Consumer Demand and the Life-Cycle Allocation of Household Expenditures." Review of Economic Studies 61: 57-80.
14. Brocas, Isabelle, and Juan Carrillo. 2000. "The Value of Information When Preferences Are Dynamically Inconsistent." European Economic Review 44: 1104-15.
15. Browning, Martin, and Annamaria Lusardi. 1996. "Household Saving: Micro Theories and Micro Facts." Journal of Economic Literature 32: 1797-1855.
16. Carrillo, Juan, and Thomas Mariotti. 2000. "Strategic Ignorance as a Self-Disciplining Device." Review of Economic Studies 67: 529-44.
17. Carroll, Christopher D. 1992. "The Buffer Stock Theory of Saving: Some Macroeconomic Evidence." Brookings Papers on Economic Activity 2: 61-156.
18. Carroll, Christopher D. 1997. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis." Quarterly Journal of Economics 112: 1-57.
19. Chung, Shin-Ho, and Richard J. Herrnstein. 1961. "Relative and Absolute Strengths of Response as a Function of Frequency of Reinforcement." Journal of the Experimental Analysis of Animal Behavior 4: 267-72.
20. Coase, Ronald H. 1972. "Durability and Monopoly." Journal of Law and Economics 15(1): 143-49.
21. Deaton, Angus. 1991. "Saving and Liquidity Constraints." Econometrica 59: 1221-48.
22. Deaton, Angus. 1992. Understanding Consumption. Oxford: Oxford University Press. Deaton, Angus, and John Muellbauer. 1986. "On Measuring Child Costs: With Applications to Poor Countries." Journal of Political Economy 94(4): 720-44.
23. DellaVigna, Stefano, and Ulrike Malmendier. 2001. "Self-Control in the Market: Evidence from the Health Club Industry." Mimeograph, Harvard University.
24. DellaVigna, Stefano, and M. Daniele Paserman. 2000. "Job Search and Hyperbolic Discounting." Discussion paper no. 00.15. Jerusalem: Maurice Falk Institute for Economic Research.
25. Diamond, Peter, and Botond Koszegi. 1998. "Hyperbolic Discounting and Retirement." Mimeograph, Massachusetts Institute of Technology.
26. Engen, Eric, William Gale, and John Karl Scholz. 1994. "Do Saving Incentives Work?" Brookings Papers on Economic Activity 1: 85-180.
27. Farkas, Steve, and Jean Johnson. 1997. "Miles to Go: A Status Report on Americans' Plans for Retirement." Public Agenda.
28. Frederick, Shane, George Loewenstein, and Ted O'Donoghue. 2002. "Time Discounting and Time Preference: A Critical Review." Journal of Economic Literature XL(June): 351-401.
29. Gourinchas, Pierre-Olivier, and Jonathan Parker. 2002. "Consumption over the Life-Cycle." Econometrica 70: 47-89.
30. Gross, David, and Nicholas Souleles. 1999a. "An Empirical Analysis of Personal Bankruptcy and Delinquency." Mimeograph, University of Pennsylvania.
31. Gross, David, and Nicholas Souleles. 1999b. "How Do People Use Credit Cards?" Mimeograph, University of Pennsylvania.
32. Gross, David, and Nicholas Souleles. 2000. "Consumer Response to Changes in Credit Supply: Evidence from Credit Card Data." University of Pennsylvania, Mimeograph.
33. Hall, Robert E. 1978. "Stochastic Implications of the Life-Cycle/Permanent Income Hypothesis: Theory and Evidence." Journal of Political Economy 96: 971-87.
34. Hall, Robert E., and Frederic S. Mishkin. 1982. "The Sensitivity of Consumption to Transitory Income: Estimates from Panel Data on Households." Econometrica 50(2): 461-81.
35. Harris, Christopher, and David Laibson. 2001. "Dynamic Choices of Hyperbolic Consumers." Econometrica 69(4): 935-57.
36. Harris, Christopher, and David Laibson. 2001. "Instantaneous Gratification." Mimeograph, Harvard University.
37. Hayashi, Fumio. 1985. "The Permanent Income Hypothesis and Consumption Durability: Analysis Based on Japanese Panel Data." Quarterly Journal of Economics 100(4): 1083-113.
38. Hubbard, Glenn, Jonathan Skinner, and Stephen Zeldes. 1994. "The Importance of Precautionary Motives in Explaining Individual and Aggregate Saving." Carnegie-Rochester Conference Series on Public Policy 40(June): 59-125.
39. Hubbard, Glenn, Jonathan Skinner, and Stephen Zeldes. 1995. "Precautionary Saving and Social Insurance." Journal of Political Economy 103: 360-99.
40. King, G. R., and A. W. Logue. 1987. "Choice in a Self-Control Paradigm with Human Subjects: Effects of Changeover Delay Duration." Learning and Motivation 18: 421-38.
41. Kirby, Kris N. 1997. "Bidding on the Future: Evidence Against Normative Discounting of Delayed Rewards." Journal of Experimental Psychology 126: 54-70.
42. Kirby, Kris N., and Richard J. Herrnstein. 1995. "Preference Reversals Due to Myopic Discounting of Delayed Reward." Psychological Science 6(2): 83-89.
43. Kirby, Kris N., and Nino N. Marakovic. 1995. "Modeling Myopic Decisions: Evidence for Hyperbolic Delay-Discounting Within Subjects and Amounts." Organizational Behavior and Human Decision Processes 64(1): 22-30.
44. Kirby, Kris N., and Nino N. Marakovic. 1996. "Delayed-Discounting Probabilistic Rewards Rates Decrease as Amounts Increase." Psychonomic Bulletin and Review 3(1): 100-4.
45. Krusell, Per, and Anthony A. Smith Jr. 1999. "Consumption-Savings Decisions with Quasi-Geometric Discounting." Mimeograph, University of Rochester.
46. Kydland, Finn E., and Edward C. Prescott. 1977. "Rules Rather than Discretion: The Inconsistency of Optimal Plans." Journal of Political Economy 85(3): 473-91.
47. Laibson, David I. 1994. "Self-Control and Savings." Ph.D. diss., Massachusetts Institute of Technology.
48. Laibson, David I. 1996. "Hyperbolic Discounting, Undersaving, and Savings Policy." Working paper no. 5635. Cambridge, Mass.: National Bureau of Economic Research.
49. Laibson, David I. 1997a. "Golden Eggs and Hyperbolic Discounting." Quarterly Journal of Economics 62(2): 443-78.
50. Laibson, David I. 1997b. "Hyperbolic Discount Functions and Time Preference Heterogeneity." Mimeograph, Harvard University.
51. Laibson, David I. 1998. Comments on "Personal Retirement Saving Programs and Asset Accumulation," by James M. Poterba, Steven F. Venti, and David A. Wise. In Studies in the Economics of Aging, edited by David A. Wise. Cambridge, Mass.: National Bureau of Economic Research and University of Chicago Press.
52. Laibson, David I., Andrea Repetto, and Jeremy Tobacman. 1998. "Self-Control and Saving for Retirement." Brookings Papers on Economic Activity 1: 91-196.
53. Laibson, David I., Andrea Repetto, and Jeremy Tobacman. 2000. "A Debt Puzzle." Mimeograph, Harvard University.
54. Loewenstein, George, and Drazen Prelec. 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation." Quarterly Journal of Economics 107: 573-98.
55. Lusardi, Annamaria. 1996. "Permanent Income, Current Income, and Consumption: Evidence from Two Panel Data Sets." Journal of Business and Economic Statistics 14: 81-90.
56. Luttmer, Erzo, and Thomas Mariotti. 2000. "Subjective Discount Factors." Mimeograph, London School of Economics.
57. Millar, A., and D. J. Navarick. 1984. "Self-Control and Choice in Humans: Effects of Video Game Playing as a Positive Reinforcer." Learning and Motivation 15: 203-18.
58. Mulligan, Casey. 1997. "A Logical Economist's Argument Against Hyperbolic Discounting." Mimeograph, University of Chicago.
59. Navarick, D. J. 1982. "Negative Reinforcement and Choice in Humans." Learning and Motivation 13: 361-77.
60. O'Donoghue, Ted, and Matthew Rabin. 1999a. "Doing It Now or Later." American Economic Review 89(1): 103-24.
61. O'Donoghue, Ted, and Matthew Rabin. 1999b. "Incentives for Procrastinators." Quarterly Journal of Economics 114(3): 769-816.
62. O'Donoghue, Ted, and Matthew Rabin. 2000. "Choice and Procrastination." Mimeograph, University of California, Berkeley.
63. Pakes, Ariel, and David Pollard. 1989. "Simulation and the Asymptotics of Optimization Estimators." Econometrica 57(5): 1027-57.
64. Parker, Jonathan A. 1999. "The Reaction of Household Consumption to Predictable Changes in Social Security Taxes." American Economic Review 89(4): 959-73.
65. Phelps, Edward S., and Robert A. Pollak. 1968. "On Second-Best National Saving and Game-Equilibrium Growth." Review of Economic Studies 35: 185-99.
66. Rankin, Deborah M. 1993. "How to Get Ready for Retirement: Save, Save, Save." New York Times, March 13, 1993, 33.
67. Read, Daniel, George Loewenstein, Shobana Kalyanaraman, and Adrian Bi- volaru. 1996. "Mixing Virtue and Vice: The Combined Effects of Hyperbolic Discounting and Diversification." Working paper. Carnegie Mellon University.
68. Runkle, David. 1991. "Liquidity Constraints and the Permanent-Income Hypothesis: Evidence from Panel Data." Journal of Monetary Economics 27(1): 73-98.
69. Shapiro, Matthew D., and Joel Slemrod. 1995. "Consumer Response to the Timing of Income: Evidence from a Change in Tax Withholding." American Economic Review 85(1): 274-83.
70. Shea, John. 1995. "Union Contracts and the Life-Cycle/Permanent Income Hypothesis." American Economic Review 85(1): 186-200.
71. Simmons Market Research Bureau. 1996. The 1996 Study of Media and Markets. New York: Simmons Market Research Bureau.
72. Solnick, Jay V., et al. 1980. "An Experimental Analysis of Impulsivity and Impulse Control in Humans." Learning and Motivation 11(1): 61-77.
73. Souleles, Nicholas. 1999. "The Response of Household Consumption to Income Tax Refunds." American Economic Review 89: 947-58.
74. Strotz, Robert H. 1956. "Myopia and Inconsistency in Dynamic Utility Maximization." Review of Economic Studies 23: 165-80.
75. Thaler, Richard H. 1981. "Some Empirical Evidence on Dynamic Inconsistency." Economic Letters 8: 201-7.
76. Thaler, Richard H. 1990. "Saving, Fungibility, and Mental Accounts." Journal of Economic Perspectives 4(1): 193-205.
77. Thaler, Richard H., and Hersh M. Shefrin. 1981. "An Economic Theory of SelfControl." Journal of Political Economy 89: 392-410.
78. Wertenbroch, Klaus. 1998. "Consumption Self-Control by Rationing Purchase Quantities of Virtue and Vice." Marketing Science 17(4): 317-37.
79. Zeldes, Stephen P. 1989a. "Consumption and Liquidity Constraints: An Empirical Investigation." Journal of Political Economy 97(2): 305-46.
80. Zeldes, Stephen P. 1989b. "Optimal Consumption with Stochastic Income: Deviations from Certainty Equivalence." Quarterly Journal of Economics 104(2): 275-98.