Is there a daily discount rate? Evidence from the food stamp nutrition cycle

Quasi-hyperbolic discounting predicts impatience over short-run tradeoffs. I present a direct non-laboratory test of this implication using data on the nutritional intake of food stamp recipients. Caloric intake declines by 10 to 15 percent over the food stamp month, implying a significant preferenc...

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Bibliographic Details
Published inJournal of public economics Vol. 89; no. 2; pp. 303 - 325
Main Author Shapiro, Jesse M.
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.02.2005
Elsevier
SeriesJournal of Public Economics
Subjects
Discounting
Food
Food stamps
Nutrition
Payments
Preferences
Public economics
Time preference
Discounting
E21
Food stamps
D91
Time preference
I38
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Summary:Quasi-hyperbolic discounting predicts impatience over short-run tradeoffs. I present a direct non-laboratory test of this implication using data on the nutritional intake of food stamp recipients. Caloric intake declines by 10 to 15 percent over the food stamp month, implying a significant preference for immediate consumption. These findings constitute a rejection of the permanent income hypothesis and are extremely difficult to reconcile with exponential discounting. The data support an explanation based on time preference and reject several alternative explanations, including highly elastic intertemporal substitution. I explore implications for the optimal timing of transfer payments under alternative assumptions about preferences.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0047-2727
1879-2316
DOI:10.1016/j.jpubeco.2004.05.003