Fertility and Time Inconsistency | Zendy

Matthias Wrede | Zendy

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Fertility and Time Inconsistency

Author(s) -

Matthias Wrede

Publication year - 2007

Publication title -

ssrn electronic journal

Language(s) - English

Resource type - Journals

ISSN - 1556-5068

DOI - 10.2139/ssrn.957558

Subject(s) - proxy (statistics) , fertility , time preference , economics , hyperbolic discounting , econometrics , discounting , dynamic inconsistency , capital (architecture) , demography , statistics , mathematics , population , mathematical economics , geography , microeconomics , sociology , finance , archaeology

This paper analyzes the impact of (quasi-) hyperbolic discounting on timing and numbers of births. Using a simple three period model it shows that without the ability to save and borrow hyperbolic discounters postpone births and give birth to less children than previously intended. In the presence of a (perfect) capital market additional qualifications are required to obtain similar results. In addition, a rough empirical cross country analysis using continued smoking as proxy for inconsistency shows that time inconsistency indeed reduces the number of births.

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