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

Eyal Lahav, Uri Benzion, Tal Shavit

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

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.

Original languageEnglish
Pages (from-to)458-465
Number of pages8
JournalJournal of Socio-Economics
Volume39
Issue number4
DOIs
StatePublished - 1 Aug 2010
Externally publishedYes

Keywords

  • Cushion effect
  • Discount rates
  • Teenagers
  • Time preference

ASJC Scopus subject areas

  • Economics and Econometrics

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