Open AccessSELF‐CONTROL PROBLEMS AND CONSUMPTION‐SAVING DECISIONS: THEORY AND EMPIRICAL EVIDENCE *
Author(s) -
TANAKA TOMOMI,
MUROOKA TAKESHI
Publication year - 2012
Publication title -
the japanese economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.205
H-Index - 28
eISSN - 1468-5876
pISSN - 1352-4739
DOI - 10.1111/j.1468-5876.2011.00549.x
Subject(s) - time preference , dynamic inconsistency , economics , consumption (sociology) , intertemporal choice , earnings , control (management) , discounting , value (mathematics) , preference , hyperbolic discounting , empirical research , self control , microeconomics , empirical evidence , public economics , psychology , social psychology , computer science , finance , social science , philosophy , management , epistemology , sociology , machine learning
Time‐discounting is a fundamental preference which affects wealth accumulation. If people are impatient, they may spend their earnings instantaneously, and do not save enough for the future. People are often time‐inconsistent, i.e., they often put exceptionally high value on immediate consumption compared to any time in the future. Whether they are aware or not, these individuals are susceptible to self‐control problems. In this paper, we review theoretical and empirical research on time‐inconsistency and self‐control problems, particularly on consumption and saving, and discuss their policy implications.