Template-type: ReDif-Paper 1.0
Author-Name: Can, B.
Author-workplace-name: Microeconomics & Public Economics
Author-Name: Erdem, O.
Title: Present-bias in different income groups
Abstract: The excessive use of credit cards and increasing consumer borrowing has been a major problem.<br/>Laibson (1997) suggests the present-bias problem as one of the driving forces of excessive borrowing. Shefrin and Thaler (1988) suggest that self-control underlies national borrowing/savings<br/>rate. We conduct a survey to check for present-bias as well as self-control problems among individuals in Turkey. Our findings show that different income groups have similar discount factors,<br/>i.e., impatience levels, but very different degrees of dynamic inconsistencies, i.e. present-bias<br/>levels. In particular, 29.4% of low-income individuals exhibit present-bias whereas this is down<br/>to 6.4% for high-income individuals. Using the parameters we achieve through the surveys,<br/>policymakers can design appropriate commitment devices for time-inconsistent individuals to<br/>ensure a sustainable level of aggregate saving and financial investment.
Classification-JEL: c93,d14,d91
Series: GSBE Research Memoranda
Creation-Date: 20130101
Number: 008
File-URL: https://cris.maastrichtuniversity.nl/ws/files/1436715/guid-81733505-3f13-46f8-9228-3eb7b6dbc13d-ASSET1.0.pdf
File-Format: application/pdf
File-Size: 360222
Handle: Repec:unm:umagsb:2013008
DOI: 10.26481/umagsb.2013008