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Chronicles of Choice: Survey Insights into Intertemporal Preferences

Author

Listed:
  • Anna Conte

    (Department of Statistical Sciences, Sapienza University of Rome)

  • Gianmarco De Santis

    (Department of Economics and Law, Sapienza University of Rome)

  • Giulia Melissari

    (Independent researcher)

  • Paola Paiardini

    (Department of Management, Sapienza University of Rome)

  • Jacopo Temperini

    (Department of Statistical Sciences, Sapienza University of Rome)

Abstract

This study uses data from the 2020 Survey on Household Income and Wealth (SHIW) conducted by the Bank of Italy to investigate the determinants of individuals' time-discounting behaviour, which plays a crucial role in economic decision-making. We explore the idea that financial literacy could mitigate higher discount rates, which usually lead to irrational behaviour. Our findings confirm this hypothesis, showing that individuals with a better grasp of compounded interest reduce their discount rates significantly. However, other aspects of financial literacy, such as inflation and risk diversification, do not affect discount rate preferences. We also consider the impact of the COVID-19 pandemic, finding that support measures may increase discount rates, possibly due to the heightened financial stress experienced by recipients.

Suggested Citation

  • Anna Conte & Gianmarco De Santis & Giulia Melissari & Paola Paiardini & Jacopo Temperini, 2024. "Chronicles of Choice: Survey Insights into Intertemporal Preferences," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 8(S2), pages 18-27, December.
    • Handle: RePEc:beh:jbepv1:v:8:y:2024:i:s2:p:19-27
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