Time preference

Statistics

Microeconomics

Astrophysics

Economics

Discounting

Variation (astronomy)

Neoclassical economics

Empirical research

Physics

Psychology

Preference

Mathematics

Intertemporal choice

Econometrics

Finance

Positive economics

Journal of Economic Literature

This paper discusses the discounted utility (DU) model: its historical development, underlying assumptions, and anomalies - the empirical regularities that are inconsistent with its theoretical predictions. We then summarize the alternate theoretical formulations that have been advanced to address these anomalies. We also review three decades of empirical research on intertemporal choice, and discuss reasons for the spectacular variation in implicit discount rates across studies. Throughout the paper, we stress the importance of distinguishing time preference, per se, from many other considerations that also influence intertemporal choices.

Time Discounting and Time Preference: A Critical Review