Hostname: page-component-7dd5485656-pnlb5 Total loading time: 0.001 Render date: 2025-10-29T08:27:09.096Z Has data issue: false hasContentIssue false
  • English
  • Français

How soon is now? Evidence of present bias from convex time budget experiments

Published online by Cambridge University Press:  14 March 2025

Uttara Balakrishnan ,
Johannes Haushofer  and
Pamela Jakiela
Uttara Balakrishnan*
Affiliation:
IMPAQ International, Washington, DC, USA
Johannes Haushofer*
Affiliation:
Princeton University, Princeton, USA Busara Center for Behavioral Economics, Nairobi, Kenya
Pamela Jakiela*
Affiliation:
Center for Global Development, Washington, DC, USA
*
uttara.balakrishnan@gmail.com
haushofer@princeton.edu
pjakiela@cgdev.org
Get access Rights & Permissions [Opens in a new window]

Abstract

We conduct a laboratory experiment in Kenya in which we elicit time and risk preference parameters from 494 participants, using convex time budgets and tightly controlling for transaction costs. Using the Kenyan mobile money system M-Pesa to make real-time transfers to subjects’ phones , we vary whether same-day payments are made immediately after the experimental session or at the close of the business day. We find strong evidence of present bias, with estimates of the present bias parameter ranging from 0.902 to 0.924—but only when same-day payments are made immediately after the experiment.

Keywords

Discount ratePresent biasExperimentMobile money

JEL classification

O12: Microeconomic Analyses of Economic Development C91: Laboratory, Individual Behavior D90: General‡

Information

Type
Original Paper
Information
Experimental Economics , Volume 23 , Issue 2 , June 2020 , pp. 294 - 321
Copyright
Copyright © 2019 Economic Science Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-019-09617-y) contains supplementary material, which is available to authorized users.

References

Abdellaoui, M., Kemel, E., Panin, A., & Vieider, F. M. (2018). Time for tea now.Google Scholar
Acland, D, & Levy, MR (2015). Naivete, projection bias, and habit formation in gym attendance. Management Science, 61(1), 146–160.CrossRefGoogle Scholar
Afriat, SN (1967). The construction of utility functions from expenditure data. International Economic Review, 8(1), 67–77.CrossRefGoogle Scholar
Ainslie, G (1975). Specious reward: A behavioral theory of impulsiveness and impulse control. Psychological Bulletin, 82(4), 463–496.CrossRefGoogle Scholar
Ambrus, A., Asgeirsdottir, T. L., Noor, J., & Sándor, L. (2015). Compensated discount functions: An experiment on the influence of expected income on time preference. http://econ.duke.edu/people/ambrus/research.Google Scholar
Andersen, S, Harrison, GW, Lau, MI, & Rutström, EE (2008). Eliciting risk and time preferences. Econometrica, 76(3), 583–618.CrossRefGoogle Scholar
Andreoni, J, & Miller, J (2002). Giving according to garp: An experimental test of the consistency of preferences for altruism. Econometrica, 70(2), 737–753.CrossRefGoogle Scholar
Andreoni, J, & Sprenger, C (2012). Estimating time preferences from convex budgets. American Economic Review, 102(7), 3333–56.CrossRefGoogle Scholar
Andreoni, J, & Sprenger, C (2012). Risk preferences are not time preferences. American Economic Review, 102(7), 3357–3376.CrossRefGoogle Scholar
Augenblick, N, Niederle, M, & Sprenger, C (2015). Working over time: Dynamic inconsistency in real effort tasks. Quarterly Journal of Economics, 130(3), 1067–1115.CrossRefGoogle Scholar
Becker, G (1962). Irrational behavior and economic theory. Journal of Political Economy, 70(1), 1–13.CrossRefGoogle Scholar
Bronars, SG (1987). The power of nonparametric tests of preference maximization. Econometrica: Journal of the Econometric Society, 55(3), 693–698.CrossRefGoogle Scholar
Carvalho, LS, Meier, S, & Wang, SW (2016). Poverty and economic decision-making: Evidence from changes in financial resources at payday. American Economic Review, 106(2), 260–284.CrossRefGoogle ScholarPubMed
Chakraborty, A, Calford, EM, Fenig, G, & Halevy, Y (2017). External and internal consistency of choices made in convex time budgets. Experimental Economics, 20(3), 687–706.CrossRefGoogle ScholarPubMed
Charness, G, Gneezy, U, & Halladay, B (2016). Experimental methods: Pay one or pay all. Journal of Economic Behavior and Organization, 13(Part A), 141–150.CrossRefGoogle Scholar
Choi, S, Fisman, R, Gale, D, & Kariv, S (2007). Consistency and heterogeneity of individual behavior under uncertainty. American Economic Review, 97(5), 1921–1938.CrossRefGoogle Scholar
Choi, S, Fisman, R, Gale, D, & Kariv, S (2007). Revealing preferences graphically: An old method gets a new toolkit. American Economic Review, 97(2), 153–158.CrossRefGoogle Scholar
Choi, S, Kariv, S, Müller, W, & Silverman, D (2014). Who is (more) rational?. American Economic Review, 104(6), 1518–1550.CrossRefGoogle Scholar
Clot, S., Stanton, C., & Willinger, M. (2015). Are impatient farmers more risk averse? Evidence from a lab-in-the-field experiment in rural Uganda. working paper.Google Scholar
Coller, M, & Williams, M (1999). Eliciting individual discount rates. Experimental Economics, 2(2), 107–127.CrossRefGoogle Scholar
Dean, M., & Sautmann, A. (2016). Credit constraints and the measurement of time preferences. Working paper.Google Scholar
DellaVigna, S, & Malmendier, U (2006). Paying not to go to the gym. American Economic Review, 96(3), 694–719.CrossRefGoogle Scholar
Epper, T. (2015). Income expectations, limited liquidity, and anomalies in intertemporal choice. Universitat st. gallen discussion paper 2015–19.Google Scholar
Falk, A, Becker, A, Dohmen, T, Enke, B, Huffman, D, & Sunde, U (2018). Global evidence on economic preferences. Quarterly Journal of Economics, 133(4), 1645–1692.CrossRefGoogle Scholar
Fischbacher, U (2007). z-tree: Zurich toolbox for ready-made economic experiments. Experimental Economics, 10(2), 171–178.CrossRefGoogle Scholar
Fisher, I. (1930). The theory of interest. Augustus M. Kelley Publishers.Google Scholar
Fisman, R, Jakiela, P, & Kariv, S (2017). Distributional preferences and political behavior. Journal of Public Economics, 155, 1–10.CrossRefGoogle Scholar
Fisman, R, Jakiela, P, Kariv, S, & Markovits, D (2015). The distributional preferences of an elite. Science, 349(5254), aab0096.CrossRefGoogle ScholarPubMed
Fisman, R, Kariv, S, & Markovits, D (2007). Individual preferences for giving. American Economic Review, 97(5), 1858–1876.CrossRefGoogle Scholar
Frederick, S, Loewenstein, G, & O’Donoghue, T (2002). Time discounting and time preference: A critical review. Journal of Economic Literature, 40(2), 351–401.CrossRefGoogle Scholar
Gabaix, X., & Laibson, D. (2017). Myopia and discounting. National bureau of economic research working paper no. 23254.CrossRefGoogle Scholar
Giné, X, Goldberg, J, Silverman, D, & Yang, D (2017). Revising commitments: Field evidence on the adjustment of prior choices. Economic Journal, 128(608), 129–158.Google Scholar
Halevy, Y (2008). Strotz meets allais: Diminishing impatience and the certainty effect. American Economic Review, 98(3), 1145–1162.CrossRefGoogle Scholar
Halevy, Y. (2014). Some comments on the use of monetary and primary rewards in the measurement of time preferences. Working paper.Google Scholar
Halevy, Y (2015). Time consistency: Stationarity and time invariance. Econometrica, 83(1), 335–352.CrossRefGoogle Scholar
Harrison, GW, Humphrey, SJ, & Verschoor, A (2010). Choice under uncertainty: Evidence from ethiopia, india and uganda. Economic Journal, 120(543), 80–104.CrossRefGoogle Scholar
Harrison, G. W., Lau, M. I., & Rutström, E. E. (2013). Identifying time preferences with experiments: Comment. Center for the Economic Analysis of Risk Working Paper WP-2013-09.Google Scholar
Haushofer, J. (2014). The cost of keeping track. Working paper.Google Scholar
Hey, JD, & Orme, C (1994). Investigating generalizations of expected utility theory using experimental data.. Econometrica: Journal of the Econometric Society, 62(6), 1291–1326.CrossRefGoogle Scholar
Jakiela, P, & Ozier, O (2016). Does africa need a rotten kin theorem? Experimental evidence from village economies. Review of Economic Studies, 83(1), 231–268.CrossRefGoogle Scholar
Janssens, W, Kramer, B, & Swart, L (2017). Be patient when measuring hyperbolic discounting: Stationarity, time consistency and time invariance in a field experiment. Journal of Development Economics, 126, 77–90.CrossRefGoogle Scholar
Kirby, KN (1997). Bidding on the future: Evidence against normative discounting of delayed rewards. Journal of Experimental Psychology: General, 126(1), 54.CrossRefGoogle Scholar
Laibson, D (1997). Golden eggs and hyperbolic discounting. Quarterly Journal of Economics, 112(2), 443–478.CrossRefGoogle Scholar
Laibson, D, Repetto, A, Tobacman, J, Hall, RE, Gale, WG, & Akerlof, GA (1998). Self-control and saving for retirement. Quarterly Journal of Economics, 1998(1), 91–196.Google Scholar
Luhrmann, M., Serra-Garcia, M., & Winter, J. (2013). Measuring teenagers’ time preferences using convex time budgets. working paper.Google Scholar
Meier, S, & Sprenger, C (2010). Present-biased preferences and credit card borrowing. American Economic Journal: Applied Economics, 2(1), 193–210.Google Scholar
O’Donoghue, T, & Rabin, M (1999). Doing it now or later. American Economic Review, 89(1), 103–124.CrossRefGoogle Scholar
Phelps, ES, & Pollak, RA (1968). On second-best national saving and game-equilibrium growth. Review of Economic Studies, 35(2), 185–199.CrossRefGoogle Scholar
Rabin, M, & Weizsacker, G (2009). Narrow bracketing and dominated choices. The American Economic Review, 99(4), 1508–1543.CrossRefGoogle Scholar
Samuelson, PA (1937). A not on measurement of utility. Review of Economic Studies, 4(2), 155–161.CrossRefGoogle Scholar
Sun, C., & Potters, J. (2016). Magnitude effect in intertemporal allocation tasks. Working paper.Google Scholar
Thaler, R (1981). Some empirical evidence on dynamic inconsistency. Economics Letters, 8(3), 201–207.CrossRefGoogle Scholar
Varian, HR (1982). The nonparametric approach to demand analysis. Econometrica, 50(4), 945–972.CrossRefGoogle Scholar
Varian, HR (1983). Non-parametric tests of consumer behaviour. Review of Economic Studies, 50(1), 99–110.CrossRefGoogle Scholar
von Bohm-Bawerk, E. (1890). Capital and interest: A critical history of economical theory. Macmillan and Company.Google Scholar
Bank, World. (2015). World development report 2015: Mind, society, and behavior. International Bank for Reconstruction and Development.Google Scholar
Supplementary material: File

Balakrishnan et al. supplementary material

Balakrishnan et. al. supplementary material
Download Balakrishnan et al. supplementary material(File)
File 1.6 MB