Published: July 6, 2020

The model of present-biased time preference is a cornerstone of behavioural economics and a new Life Course Centre Working Paper provides evidence that fills important gaps in empirical research on this model.

Self-control is a key characteristic for effective self-regulation and personal goal attainment, and economists model self-control problems through time-inconsistent preferences. The underlying assumption of the model is a ‘present bias’ toward current consumption, as the value of future rewards are downweighed relative to rewards in the present.

This new study uses data from a longitudinal experiment conducted in public high schools in Guiyang City, China in February and March 2019, and elicits individual preferences for three reward types: money, healthy food and unhealthy food. Subjects faced the same decisions, featuring the same reward amounts delivered on the same dates, at two points in time. In the first session, all choices were rewards to be received at two dates in the future, while in the second session the sooner rewards were available immediately. The sample consisted of 697 low-income Chinese high school students, with an average age of 16.1 years, making it unique in both socio-economic status and age. Key findings of the study include:
• subjects choose to receive 4.2% more food on the sooner payment date when the decision is made on that day than when it is made in advance
• subjects choose to receive 7% more money on the sooner payment date when the decision is made on that day than when it is made in advance

The Working Paper, authored by Stephen L. Cheung, Professor Agnieszka Tymula and Xueting Wang from the University of Sydney School of Economics, finds strong present bias for both money and food, and that individual measures of present bias are moderately correlated across reward types. The study’s experimental measures of time preferences over money predict field behaviours (including BMI, alcohol consumption, smoking, and academic performance) better than preferences elicited over foods.

You can read the full Working Paper, ‘Present bias for monetary and dietary rewards: Evidence from Chinese teenagers,’ here.