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time preference

Measuring the rate at which we discount the future: a comparison of two new field-based approaches

Jed Friedman's picture

Many key economic decisions involve implicit trade-offs over time: how much to save or invest today affects how much to spend both today and tomorrow, and individuals will differ in their preferences for satisfaction today versus delayed satisfaction tomorrow. Economists call the relative preference (or disfavor) for the present over the future a discount rate (i.e. the rate at which we discount the future for the present), and the discount rate is a core parameter in economic models of choice and behavior.