Consume now or later? Time inconsistency, collective choice, and revealed preference

Abi Adams, Laurens Cherchye, Bram De Rock, Ewout Verriest

Research output: Contribution to journalArticle

12 Scopus citations

Abstract

We develop a revealed preference methodology that allows us to explore whether time inconsistencies in household choice are the product of individual preference nonstationarities or the result of individual heterogeneity and renegotiation within the household. An empirical application to household-level microdata highlights that an explicit recognition of the collective nature of household choice enables the observed behavior to be rationalized by a theory that assumes preference stationarity at the individual level. The methodology created in this paper also facilitates the recovery of theory-consistent discount rates for each individual within particular household under study.

Original languageEnglish (US)
Pages (from-to)4027-4070
Number of pages44
JournalAmerican Economic Review
Volume104
Issue number12
DOIs
StatePublished - Dec 1 2014

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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