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Subjective time discount rates among teenagers and adults: Evidence from Israel

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  • Lahav, Eyal
  • Benzion, Uri
  • Shavit, Tal

Abstract

This study is an empirical examination of the personal discount rates used by teenagers and adults. The participants answered a time-preference questionnaire and were asked about the bank interest paid for deposits. The results demonstrate that teenagers have a very high personal discount rate in comparison to adults. In addition, we found that receiving a regular allowance increases the teenagers' willingness to wait. Our results indicate that the influence of teenagers' poor financial knowledge, which ought to increase the personal discount rate, is stronger than the effect of their safety net that should reduce the personal discount rate.

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  • Lahav, Eyal & Benzion, Uri & Shavit, Tal, 2010. "Subjective time discount rates among teenagers and adults: Evidence from Israel," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(4), pages 458-465, August.
    • Handle: RePEc:eee:soceco:v:39:y:2010:i:4:p:458-465
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