Exponential or Hyperbolic? Identifying and Testing the Predictive Power of Time Preference Over Unhealthy Behaviours

Jianjun Tang, W George Hutchinson, Susan Chilton , Ruth Hunter, Morten Lau, Frank Kee

Research output: Contribution to journalArticle

Abstract


It is crucial to more thoroughly understand discounting behaviour because it has important implications for designing interventions with financial incentives for behavioural change. This means examining discounting functional forms as well as discount rates and establishing their impacts across multiple as well as singular unhealthy behaviours. We provide a parametric specification test on the basis of a series of field experiments among 176 civil servants in Belfast, Northern Ireland. The results suggested that hyperbolic discounting performs better than exponential discounting and that the hyperbolic form which decomposes hyperbolic discounting into impatience and time-inconsistent discounting had the best fit. It is further revealed that obese smokers and non-obese smokers were more impatient with respect to financial rewards than the baseline group of non-obese non-smokers, whereas obese non-smokers did not show different discount rates than the baseline group. No correlation was found between the time-inconsistency nature of discounting and smoking and obesity.




Keywords: Hyperbolic discounting; Exponential discounting; Unhealthy behaviour; Economic field experiment

JEL Classification: C93 D90 I12
Original languageEnglish
Pages (from-to)1-32
JournalSSRN Electronic Journal
Volumessrn.2823468
DOIs
Publication statusPublished - 16 Jul 2016

Keywords

  • Hyperbolic discounting; Exponential discounting; Unhealthy behaviour; Economic field experiment

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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