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Age Differences in Intertemporal Choice: U-Shaped Associations in a Probability Sample of German Households

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  • David Richter
  • Rui Mata

Abstract

To describe adult age differences in intertemporal choice, we analyzed data from 1,491 participants who completed an incentivized monetary intertemporal discounting choice task involving different conditions (e.g., time delay of 12 months vs. 1 month). Respondents completed a number of other survey measures, including behavioral measures of cognitive ability, and self-reports concerning health, financial security, and demographic characteristics. We found significant quadratic (U-shaped) effects of age in task conditions involving 12-month (but not 1-month) delays, with middle-aged adults proving most patient relative to younger and older adults. The age effects found were robust to the inclusion of covariates, including cognitive ability, that have been suggested to underlie individual and age differences in time preferences. The results favor theories that propose non-linear effects of age-related processes or multiple mechanisms underlying the development of intertemporal choice across the life span and suggest that it is important to consider long time delays and wide age ranges when trying to understand age differences in time preferences.

Suggested Citation

  • David Richter & Rui Mata, 2018. "Age Differences in Intertemporal Choice: U-Shaped Associations in a Probability Sample of German Households," SOEPpapers on Multidisciplinary Panel Data Research 974, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp974
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    References listed on IDEAS

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    1. Trostel, Philip A & Taylor, Grant A, 2001. "A Theory of Time Preference," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 379-395, July.
    2. Olivier Toubia & Eric Johnson & Theodoros Evgeniou & Philippe Delquié, 2013. "Dynamic Experiments for Estimating Preferences: An Adaptive Method of Eliciting Time and Risk Parameters," Management Science, INFORMS, vol. 59(3), pages 613-640, June.
    3. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    4. Jule Specht & Boris Egloff & Stefan C. Schmukle, 2011. "Stability and Change of Personality across the Life Course: The Impact of Age and Major Life Events on Mean-Level and Rank-Order Stability of the Big Five," SOEPpapers on Multidisciplinary Panel Data Research 377, DIW Berlin, The German Socio-Economic Panel (SOEP).
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    Citations

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    Cited by:

    1. Kulati, Ellam & Myck, Michał & Pasini, Giacomo, 2023. "Temporal discounting in later life," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 87-101.
    2. William J. Skylark & Kieran T. F. Chan & George D. Farmer & Kai W. Gaskin & Amelia R. Miller, 2020. "The delay-reward heuristic: What do people expect in intertemporal choice tasks?," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(5), pages 611-629, September.
    3. repec:cup:judgdm:v:15:y:2020:i:5:p:611-629 is not listed on IDEAS
    4. Bertoli, Paola & Grembi, Veronica & Morelli, Massimo & Rosso, Anna Cecilia, 2023. "In medio stat virtus? Effective communication and preferences for redistribution in hard times," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 105-147.
    5. Jiri Rotschedl & Helena Mitwallyova, 2021. "Study of Intertemporal Discounting According to Age Groups," International Journal of Economic Sciences, European Research Center, vol. 10(2), pages 127-140, December.
    6. Preuss, Malte, 2021. "Intra-individual stability of two survey measures on forward-looking attitude," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 201-227.
    7. Craig Wesley Carpenter & Scott Loveridge & Maureen Mickus, 2021. "Research note: Age, retirement, and intertemporal resource decision ability," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 542-555, June.
    8. Burro, Giovanni & McDonald, Rebecca & Read, Daniel & Taj, Umar, 2022. "Patience decreases with age for the poor but not for the rich: an international comparison," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 596-621.
    9. Fidanoski, Filip & Johnson, Timothy, 2023. "A z-Tree implementation of the Dynamic Experiments for Estimating Preferences [DEEP] method," Journal of Behavioral and Experimental Finance, Elsevier, vol. 38(C).

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    Keywords

    Decision-Making; Cognition; Life Course and Developmental Change; Time PreferencesJEL:;
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