Quasi-hyperbolic time preferences and their intergenerational transmission

Abstract

This study explores the intergenerational transmission of time preferences and focuses on the question of which specific aspects of mother's time preference are related to her preschool child's ability to delay gratification. We provide a new procedure for calculating the parameters of a ‘quasi-hyperbolic’ discount function (Laibson, 1997) using two trade-off experiments. We apply the procedure to a sample of 213 mother-child pairs and show that especially mother's beta parameter is related to her preschool child's ability to delay gratification.

Keywords:

• intergenerational transmission
• time preference
• quasi-hyperbolic
• preschool children

JEL Classification:

• D90
• D10

Acknowledgements

We would like to thank the Leibniz Association (LA) for supporting this study in the research network ‘Noncognitive Skills: Acquisition and Economic Consequences’. We furthermore thank Ernst Fehr, Jürgen Schupp, Katharina Spieß and Gert Wagner for making the project on mother and child preferences possible. The views expressed in this article are those of the authors and do not necessarily reflect the views of the LA. The usual disclaimer applies.

Notes

¹ The basic experimental design was developed by Dohmen et al. (2010).

² The sample was taken from a pretest for the German Socio-Economic Panel Study (SOEP) performed in 2008, see Bartling et al. (2010) and Kosse and Pfeiffer (2012). To control for confounding effects, our sample is restricted to biological mothers with German citizenship who breastfed their child and for whom all variables are available. The sample is also restricted to children who like gummy bears to ensure incentive compatibility. The restrictions reduced the number of observations from 271 to 213.

³ 20 steps were implemented. After the first choice of the larger-later reward it was assumed that participants prefer all higher LL.

⁴ Estimates are available from the corresponding author upon request.

⁵ See Bartling et al. (2010) for a detailed description of the experiment.