Age and Time Preference among the Elderly

Abstract

Given the growing aging population, it has never been more important to understand economic decisions made by the elderly. Time preferences influence a variety of economic decisions. However, time-discount rates and time consistency among the elderly have not been fully investigated in the literature. We conduct a field experiment involving intertemporal discounting tasks for the elderly participants to examine the relationship between time preferences and individual characteristics. The results show that the degree of discounting follows an inverse U-shaped pattern with respect to age among the elderly participants. We also find reverse time-inconsistency or future bias, which is more likely to be observed among the very old with poor health conditions.