TY  - RPRT
        AU  - Huffman, David B.
AU  - Barenstein, Matias
        TI  - Riches to Rags Every Month? The Fall in Consumption Expenditures Between Paydays
        PY  - 2004/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1430
        UR  - https://www.iza.org/publications/dp1430
        AB  - This paper finds declining consumption expenditure between paydays, for a typical household in the working population of the UK. The magnitude is inconsistent with exponential time preference, but compatible with quasi-hyperbolic discounting. However, the hyperbolic model predicts that credit constraints drive the decline, and we find only mixed evidence in this regard. We also observe a method-of-payment result that suggests a role for mental accounting: households choose declining cash spending but flat credit-card spending over the pay period. We propose an alternative explanation for the results, based on cognitive costs of budgeting and perceptual biases, rather than self-control problems.
        KW  - consumption
KW  - hyperbolic-discounting
KW  - mental accounting
KW  - payday
KW  - reference-dependent preferences
KW  - credit cards
        ER  -