IZA DP No. 7165: Time Preferences and Lifetime Outcomes
published as 'Adolescent Time Preferences Predict Lifetime Outcomes' in: Economic Journal, 2014, 124 (580), F739-F761
This paper investigates the relationship between time preferences and lifetime social and economic behavior. We use a Swedish longitudinal dataset that links information from a large survey on children's time preferences at age 13 to administrative registers spanning over five decades. Our results indicate a substantial adverse relationship between high discount rates and school performance, health, labor supply, and lifetime income. Males and high ability children gain significantly more from being future-oriented. These discrepancies are largest regarding outcomes later in life. We also show that the relationship between time preferences and long-run outcomes operates through early human capital investments.