Riches to rags every month? the fall in consumption expenditures between paydays
by David Huffman
"This paper finds declining consumption expenditure between paydays, for a typical household in the working population of the UK. The magnitude is inconsistent with exponential time preference, but compatible with quasi-hyperbolic discounting. However, the hyperbolic model predicts that credit constraints drive the decline, and we find only mixed evidence in this regard. We also observe a method-of-payment result that suggests a role for mental accounting: households choose declining cash spending but flat credit-card spending over the pay period. We propose an alternative explanation for the results, based on cognitive costs of budgeting and perceptual biases, rather than self-control problems"--Forschungsinstitut zur Zukunft der Arbeit web site.
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Riches to rags every month? the fall in consumption expenditures between paydays
2004, IZA
Electronic resource
in English
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Includes bibliographical references.
Title from PDF file as viewed on 5/3/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.
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