MEASURING SELF-CONTROL PROBLEMS: A STRUCTURAL ESTIMATION

MEASURING SELF-CONTROL PROBLEMS: A STRUCTURAL ESTIMATION

We adopt a two-stage Method of Simulated Moments to estimate the preference parameters in a life-cycle consumption-saving model augmented with temptation disutility. Our approach estimates the parameters from the comparison between simulated moments with empirical moments observed in the US Survey o...

Full description

Saved in:
Bibliographic Details
Published in:Journal of the European Economic Association Vol. 10; no. 5; pp. 1084 - 1115
Main Author: Bucciol, Alessandro
Format: Journal Article
Language:English
Published: Malden, USA Wiley-Blackwell 01-10-2012
Blackwell Publishing Inc
Oxford University Press
Subjects:
Age
Assets
Consumption
Curvature
D91
E21
Economic models
Economic theory
Estimation
G11
Illiquid assets
Life cycles
Liquid assets
Modeling
Parameter estimation
Parametric models
Self control
Simulation
Standard error
Studies
Temptation
Term weighting
U.S.A
United States > US
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We adopt a two-stage Method of Simulated Moments to estimate the preference parameters in a life-cycle consumption-saving model augmented with temptation disutility. Our approach estimates the parameters from the comparison between simulated moments with empirical moments observed in the US Survey of Consumer Finances; to identify the parameters we consider moments from liquid and illiquid asset holdings at different ages. We find evidence of a small but significantly positive degree of temptation. The temptation model predicts consumption choices similar to the model with standard preferences, and holdings of liquid and illiquid assets closer to those observed in the empirical data.
Bibliography:E‐mail
alessandro.bucciol@univr.it
Acknowledgments: I am grateful to Guglielmo Weber for his advice on this and earlier versions. Special thanks also go to the editor and two anonymous referees. Comments from Christopher Carroll, Alexander Michaelides, and Stephan Meier were also of significant benefit. I further thank Viola Angelini and the seminar participants at MIT, University of Padua, University of Venice, IFS, and the 2007 NBER Summer Institute Workshop on “Aggregate Implications of Microeconomic Consumption Behavior”. Financial support from MIUR (PRIN 2007AC54X5_002) and Netspar is gratefully acknowledged. I am responsible for any error.
The editor in charge of this paper was Orazio Attanasio.
ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:1542-4766
1542-4774
DOI:10.1111/j.1542-4774.2012.01076.x