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Source: Hopkins Population Center
Resulting in 1 citation.
1. Bishai, David M.
Lifecycle Changes in the Rate of Time Preference: Testing the Theory of Endogenous Preferences and Its Relevance to Adolescent Substance Use
Presented: Taiwan, Taipei, International Conference on Health Economics, March 1999
Cohort(s): NLSY79
Publisher: Hopkins Population Center
Keyword(s): Adolescent Behavior; Age and Ageing; Education; Endogeneity; Fathers, Presence; Gender; Health/Health Status/SF-12 Scale; Life Course; Life Cycle Research; Religion; Religious Influences; Substance Use; Time Preference

Permission to reprint the abstract has not been received from the publisher.

Economic theory indicates that because one's activities to improve health reward one in the future, persons who value the future more highly will be more prone to healthy activity. Without measures of time preference we can neither test this theory nor understand what makes people value future events more highly. Progress in this area requires a method to infer measures of time preference from the secondary datasets used in public health and economic research. Time preference in its econometric expression is the measurable forfeiting of additional goods in the present to enjoy goods in the future. The rate of time preference varies from 0 for individuals who are indifferent between present and future consumption to infinity for individuals who have placed no value on future consumption. When subjects decide to forego higher wages in the present by taking safer jobs that increase their chance of future survival they send signals about their time preference (mixed with signals about risk aversion, other job prospects, family pressures, etc.). These wage-risk tradeoffs offer scholars interested in measuring time preference the convenience of a secondary dataset, but the drawback of needing to control for the confounding and endogenous factors. This study applies econometric techniques to the National Longitudinal Survey of Youth (NLSY) to derive estimates of the levels of time preference for each labor force participant in each of 15 waves of data from 1979 to 1994. With these estimates I describe the evolution of time preference over the life course. I test the following hypotheses suggested by Becker and Mulligan (Becker and Mulligan 1997)in their theory of endogenous time preferences: 1)Age and Education reduce the rate of time preference; 2)Female gender and Father's Presence in the Home at age 14 reduce the rate of time preference; 3) Religious participation reduces the rate of time preference. Finally I show that subjects with a more immediate time preference are more likely to drink alcohol and conditional upon drinking are more likely to drink heavily. A policy maker with a better understanding of the determinants of time preference can design better policies that empower children to value their future well-being and thereby increase present healthy behavior.
Bibliography Citation
Bishai, David M. "Lifecycle Changes in the Rate of Time Preference: Testing the Theory of Endogenous Preferences and Its Relevance to Adolescent Substance Use." Presented: Taiwan, Taipei, International Conference on Health Economics, March 1999.