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Impatient in experiments, but patient in simulations: a challenge to the heckman-type model

journal contribution
posted on 2016-06-01, 00:00 authored by E Gahramanov, Xueli TangXueli Tang
Intertemporal labour–leisure choice models typically assume agents have a very low degree of impatience. Yet there is a lot of empirical evidence indicating a high degree of impatience. Using a life-cycle model of consumption–saving and labour–leisure choice, we show that even if an agent displays a relatively moderate degree of impatience, his labour supply choice delivers highly counterfactual patterns. We resolve this counterfactual finding by augmenting the standard model with a time-dependent marginal utility of leisure assumption that is consistent with some recent evidences from leisure studies. We also introduce various extensions and discuss their relative importance and associated challenges.

History

Journal

Economic record

Volume

92

Issue

297

Pagination

268 - 290

Publisher

Economic Society of Australia

Location

Willoughby, N.S.W.

ISSN

0013-0249

eISSN

1475-4932

Language

eng

Publication classification

C Journal article; C1 Refereed article in a scholarly journal

Copyright notice

2016, Economic Society of Australia

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