Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2013:22: Time preferences and lifetime outcomes

Bart Golsteyn (), Hans Grönqvist () and Lena Lindahl ()
Additional contact information
Bart Golsteyn: ROA, Maastricht University, Postal: P O Box 616, 6200 MD, Maastricht, The Netherlands
Hans Grönqvist: Swedish Institute for Social Research (SOFI), Stockholm University, Postal: SE-106 91 Stockholm , Sweden
Lena Lindahl: Swedish Institute for Social Research (SOFI), Postal: SE-106 91 Stockholm , Sweden

Abstract: This paper investigates the relationship between time preferences and lifetime social and economic behavior. We use a Swedish longitudinal dataset that links information from a large survey on children’s time preferences at age 13 to administrative registers spanning over four decades. Our results indicate a substantial adverse relationship between high discount rates and school performance, health, labor supply, and lifetime income. Males and high ability children gain significantly more from being future-oriented. These discrepancies are largest regarding outcomes later in life. We also show that the relationship between time preferences and long-run outcomes operates through early human capital investments.

Keywords: Intertemporal choice; personality; preference parameter; human capital; income; health

JEL-codes: D03; D91; J01

33 pages, October 4, 2013

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