Eliciting Time Preferences When Income and Consumption Vary: Theory, Validation, and Application to Job Search

Michèle Belot; Philipp  Kircher; Paul Muller

doi:10.1257/mic.20220118

Eliciting Time Preferences When Income and Consumption Vary: Theory, Validation, and Application to Job Search

Michèle Belot, Philipp Kircher, Paul Muller

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Abstract

We propose a simple method for eliciting individual time preferences without estimating utility functions even in settings where background consumption changes over time. It relies on eliciting preferences for receiving high stakes lottery tickets at different points in time. In a standard intertemporal choice model high rewards decouple lottery choices from variation in background consumption. We investigate robustness to other assumptions theoretically, and validate our elicitation method experimentally. We illustrate an application of our method with unemployed job seekers, which naturally have income/consumption variation.

Original language	English
Pages (from-to)	130-170
Number of pages	41
Journal	American Economic Journal: Microeconomics
Volume	17
Issue number	1
DOIs	https://doi.org/10.1257/mic.20220118
Publication status	Published - Feb 2025

Funding

This study was preregistered on the AEA RCT Registry, AEARCTR-0011729, and had IRB approval from Cornell University, IRB0147750. We are grateful to Lucia Casal for her excellent research assistance, and thank many seminar audiences for their valuable suggestions. We are particularly grateful to Glenn Harrison, Ted O\u2019Donoghue, Andrew Clausen, Karlijn Morsink, and Coen Teulings. Kircher gratefully acknowledges support through European Research Council Grant No 284119. All data used in this article are accessible from Belot, Kircher, and Muller (2025).

Funders	Funder number
Cornell University	IRB0147750
European Research Council	284119

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10.1257/mic.20220118

belot-et-al-2025-eliciting-time-preferences-when-income-and-consumption-vary-theory-validation-and-application-to-jobFinal published version, 843 KBLicence: Article 25fa Dutch Copyright Act

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Eliciting Time Preferences When Income and Consumption Vary: Theory, Validation, and Application to Job Search

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Eliciting time preferences when income and consumption vary: Theory, validation & application to job search

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