Quasi-hyperbolic Present Bias: A Meta-analysis

43 Pages Posted: 24 Aug 2021

See all articles by Stephen L. Cheung

Stephen L. Cheung

The University of Sydney; IZA Institute of Labor Economics

Agnieszka Tymula

The University of Sydney - School of Economics

Xueting Wang

The University of Sydney

Multiple version iconThere are 2 versions of this paper

Date Written: August 23, 2021

Abstract

Quasi-hyperbolic discounting is one of the most well-known and widely-used models to capture selfcontrol problems in the economics literature. The underlying assumption of this model is that agents have a “present bias” toward current consumption such that all future rewards are downweighed relative to rewards in the present (in addition to standard exponential discounting for the length of delay). We report a meta-analytic dataset of estimates of the present bias parameter 𝛽 based on searches of all major research databases (62 papers with 81 estimates in total). We find that the literature shows that people are on average present biased for both monetary rewards (𝛽 = 0.82%-|-| confidence interval of [0.74, 0.90]) and non- monetary rewards (𝛽 = 0.66, 95% confidence interval of [0.51, 0.85]) but that substantial heterogeneity exists across studies. The source of this heterogeneity comes from the subject pool, elicitation methodology, geographical location, payment method, mode of data collection (e.g. laboratory or field), and reward type. There is evidence of selective reporting and publication bias in the direction of overestimating the strength of present-bias (making 𝛽 estimates smaller), but present bias still exists after correcting for these issues (for money 𝛽 = 0.87 with 95% confidence interval of [0.82, 0.92] after correcting for selective reporting).

Keywords: quasi-hyperbolic discounting, present bias, beta-delta model, meta-analysis

JEL Classification: C91, D12, D91

Suggested Citation

Cheung, Stephen L. and Tymula, Agnieszka and Wang, Xueting, Quasi-hyperbolic Present Bias: A Meta-analysis (August 23, 2021). Life Course Centre Working Paper No. 2021-15, Available at SSRN: https://ssrn.com/abstract=3909663 or http://dx.doi.org/10.2139/ssrn.3909663

Stephen L. Cheung

The University of Sydney ( email )

School of Economics
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Sydney, NSW 2006
Australia
+61 2 9351 2135 (Phone)
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HOME PAGE: http://https://sydney.edu.au/arts/economics/staff/profiles/stephen.cheung.php

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Agnieszka Tymula

The University of Sydney - School of Economics ( email )

Social Sciences Building
The University of Sydney
Sydney, NSW 2006 2006
Australia

Xueting Wang (Contact Author)

The University of Sydney

University of Sydney
Sydney, NSW 2006
Australia

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