Time Discounting and Wealth Inequality
Year: 2020
Type: article
Study design: Observational Study
Abstract: 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. (JEL C91, D15, D31, E21)
Source: American Economic Review
DOI: 10.1257/aer.20181096
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
SDG: Reduced inequalities
Open Access status: green
OpenAlex ID: W3014661183