Present-biased time preference for monetary rewards – a meta-analysis

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Presenter: Xueting Wang | University of Sydney

Abstract

Quasi-hyperbolic discounting is one of the most well-known and used models to capture self-control problems. The underlying assumption of the model is that agents have a “present bias” toward current consumption, as all future rewards are downweighed relative to rewards in the present, in addition to the standard exponential discounting of delayed rewards. To create a meta-analytic dataset of present bias estimates, we searched all major research databases using the intersection of a set of methodology keywords with a set of topic keywords. We identified 63 articles with 85 estimates of present bias parameter. The literature shows that people are on average present biased towards money (β=0.82), but substantial heterogeneity across studies exists. The source of heterogeneity comes from the subject pool, methodology (e.g. BDM auction), geographical location of data collection, payment method, the study place (e.g. online vs. lab). Reward type also has an influence on the estimates of present-bias parameter: individuals show stronger present bias towards real effort and health outcomes compared to monetary rewards. There is evidence of publication bias in the direction of overestimating present-bias, but the present bias still exists after correcting for potential publication bias.

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Important note: This is a hybrid event and will also require a password to access the online seminar. Please email the event organiser – Dave Mc Manamon (dave.mcmanamon@sydney.edu.au) for access.