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Time Compression

Author

Listed:
  • Aadland, David
  • Shaffer, Sherrill

Abstract

Economists have generally ignored the notion that perceived time may differ from clock time. Borrowing from the behavioral psychology literature, we investigate the case of time compression whereby perceived time passes more quickly than actual time. A framework is presented to embed time compression in economic models. We then apply the principle to a standard lifecycle permanent income model with endogenous labor. Time compression provides an alternative explanation of why older individuals, even those without declining labor productivity, may choose to reduce their work effort.

Suggested Citation

  • Aadland, David & Shaffer, Sherrill, 2010. "Time Compression," MPRA Paper 29298, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29298
    as

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    File URL: https://mpra.ub.uni-muenchen.de/29298/1/MPRA_paper_29298.pdf
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    Other versions of this item:

    • David Aadland & Sherrill Shaffer, 2012. "Time Compression," CAMA Working Papers 2012-28, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

    References listed on IDEAS

    as
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    3. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    4. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    5. Caliendo, Frank & Aadland, David, 2007. "Short-term planning and the life-cycle consumption puzzle," Journal of Economic Dynamics and Control, Elsevier, vol. 31(4), pages 1392-1415, April.
    6. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 1039-1073.
    7. Costa, Dora L., 1998. "The Evolution of Retirement," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226116082.
    8. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 11-44, August.
    9. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    10. George Loewenstein & Drazen Prelec, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 573-597.
    11. Dora L. Costa, 1998. "The Evolution of Retirement: An American Economic History, 1880-1990," NBER Books, National Bureau of Economic Research, Inc, number cost98-1.
    12. Fairris, D. & Alston, L.J., 1990. "Wages And The Intensity Of Labor Effort: Efficiency Wages Versus Compensating Payments," Department of Economics Working Papers 138, Department of Economics, Williams College.
    13. Filer, Randall K., 1987. "Joint estimates of the supply of labor hours and the intensity of work effort," Journal of Behavioral Economics, Elsevier, vol. 16(3), pages 1-12.
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    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. On the perception of time
      by Economic Logician in Economic Logic on 2011-04-18 19:38:00

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    More about this item

    Keywords

    Time Compression; Discounting; Lifecycle Permanent Income Model; Retirement;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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