ITEM METADATA RECORD
Title: Consume now or later? Time inconsistency, collective choice and revealed preference
Authors: Adams, Abi
Cherchye, Laurens
De Rock, Bram
Verriest, Ewout
Issue Date: Aug-2012
Publisher: KU Leuven CES
Series Title: CES - Discussion paper series DPS12.12 pages:1-32
Abstract: This paper develops a revealed preference methodology for exploring whether time inconsistencies in household choice are the product of nonstationarities at the individual level or the result of individual heterogeneity and renegotiation within the collective unit. An empirical application to household-level microdata highlights that an explicit recognition of the collective nature of choice allows the vast majority of household behaviour to be rationalised by theory that assumes preference stationarity at the individual level. For our particular short panel data set, simply permitting limited intrahousehold heterogeneity in time preferences allows the choices of 98.4% of the sample to be rationalised by a model that assumes exponential discounting at the individual level. We also find that couples characterized by lower divergence in spousal discount rates are older, more likely to have children and wealthier, which we take as indications of experiencing higher match quality.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Mathematics @ Kulak
Faculty of Business and Economics @ Kulak – miscellaneous
Department of Economics @ Leuven - miscellaneous
Research Center of Public Economics @ Leuven

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