Time Discounting and Wealth Inequality

Arbeitspapier

This paper documents a large association between individuals' time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CEBI Working Paper Series ; No. 08/19

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Intertemporal Household Choice; Life Cycle Models and Saving ; Personal Income, Wealth, and Their Distributions ; Macroeconomics: Consumption; Saving; Wealth
• Subject: Wealth inequality ; savings behavior ; time discounting ; experimental methods ; administrative data

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Epper, Thomas ; Fehr, Ernst ; Fehr-Duda, Helga ; Kreiner, Claus Thustrup ; Lassen, David Dreyer ; Leth-Petersen, Søren ; Rasmussen, Gregers Nytoft
• Event: Veröffentlichung
• (who): University of Copenhagen, Department of Economics, Center for Economic Behavior and Inequality (CEBI)
• (where): Copenhagen
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/258908
• Last update: 10.03.2025, 11:44 AM CET