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Over-savings and hyperbolic discounting

Author

Listed:
  • François Salanie

    (LERNA - Economie des Ressources Naturelles - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives)

  • Nicolas N. Treich

    (LERNA - Economie des Ressources Naturelles - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives)

Abstract

Hyperbolic discounting models are widely seen as implying that consumers do not save enough, in accordance with the observed low rates of savings of some households. This paper qualifies this view by showing that hyperbolic consumers may ‘oversave' in the short run. The result extends to uncertainty on future income and does not depend on whether preferences are present-biased or future-biased. A generalized comparative statics analysis of self-control is introduced, and its relationship to the analysis of uncertainty on discount factors is emphasized.

Suggested Citation

  • François Salanie & Nicolas N. Treich, 2006. "Over-savings and hyperbolic discounting," Post-Print hal-02663421, HAL.
    • Handle: RePEc:hal:journl:hal-02663421
    DOI: 10.1016/j.euroecorev.2005.05.003
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    References listed on IDEAS

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