What question did this study set out to answer?

Investigate how self-control problems and hyperbolic discounting influence household consumption, credit card borrowing, and long-term wealth accumulation for retirement.

January 1, 1998Brookings Papers on Economic ActivityOpen Access

Self-Control and Saving for Retirement

View Full Paper

Ask AI

Bookmark

Investigate how self-control problems and hyperbolic discounting influence household consumption, credit card borrowing, and long-term wealth accumulation for retirement.
Calibrated a dynamic life-cycle simulation model incorporating hyperbolic discount functions, income uncertainty, and liquidity constraints.
Analyzed household portfolio choices across liquid wealth, illiquid retirement assets, and high-interest consumer credit.
Consumers with hyperbolic preferences simultaneously accumulate illiquid assets and borrow extensively on high-interest credit cards, matching empirical macroeconomic patterns.
Illiquid assets function as effective commitment mechanisms that help present-biased individuals constrain future overspending and safeguard retirement wealth.

Implication

Economic modeling reveals how present bias drives undersaving and debt accumulation across households, highlighting the essential role of illiquid commitment assets.

Abstract

David I. Laibson, Andrea Repetto, Jeremy Tobacman, Robert E. Hall, William G. Gale, George A. Akerlof, Self-Control and Saving for Retirement, Brookings Papers on Economic Activity, Vol. 1998, No. 1 (1998), pp. 91-196

Discussion

No takes yet. Share an insight, caveat, or question.

Cite This Study

Laibson et al. (1998) studied this question.

synapsesocial.com/papers/69de5bb0bf539e2270558694 https://doi.org/10.2307/2534671

View Full Paper

Ask AI

Bookmark

Implication

Economic modeling reveals how present bias drives undersaving and debt accumulation across households, highlighting the essential role of illiquid commitment assets.

Self-Control and Saving for Retirement

Key Points

Implication

Abstract

Discussion

Cite This Study

Self-Control and Saving for Retirement

Key Points

Implication

Abstract

Discussion

Cite This Study

Keep reading

Keep reading