Pension contributions as a commitment device: Evidence of sophistication among time-inconsistent households

Sourdin, Patricia

doi:10.1016/j.joep.2007.12.005

Cited by 13 publications

(6 citation statements)

References 33 publications

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“…However, with the increasing proportion of people receiving higher education the people in East Asian countries have begun to have access to Western culture. People in Western countries have also started to understand Confucian culture of East Asia and people's rationality is affected accordingly (Sourdin, 2008). The cultural collision and integration of the world can indirectly start by influencing people's self-control (Pongratz, 2006), and then correct the inhibitions of culture on residents' health reporting behavior.…”

Section: Typical Characteristics Of Eastern and Western Culturementioning

confidence: 99%

The Role of Culture in Health Reporting Bias

Yang¹

2021

JSS

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In this paper, I creatively use the cognitive bias of self-control to express the differences between Eastern and Western cultures, and then clarify the formation mechanism of two types of health reporting behaviors: truthful reporting (in Western countries) and reporting only the good news while concealing unpleasant information (in East Asian countries). Using panel data from 13 countries from 2000 to 2016, I analyzed the role of culture in health reporting bias by using sex index and Confucianism dummy variable as proxy variables for culture. The results show that traditional variables have only a 50% explanatory ability in interpreting the reporting bias in health between East and West. Unobservable national individual factors such as culture that do not change over time can account for the remaining 44% of health reporting bias. Among these individual factors, 92.3% can be attributed to culture as represented by the sex index, and about 0.23% can be explained by the Confucianism dummy variable. In addition, the popularization of tertiary education can effectively correct the cognitive bias of self-control, thus eliminating the deep inhibition of culture on health reporting behavior. My research provides inspiration and technical support for improving the accuracy of self-reporting health in the future.

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Section: Typical Characteristics Of Eastern and Western Culturementioning

confidence: 99%

The Role of Culture in Health Reporting Bias

Yang¹

2021

JSS

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“…illiquidity assets, savings accounts, 401(k) and paying cash rather than using credit cards). In that case, they can prevent their future selves from overconsumption and overborrowing due to the preference reversal (see Laibson, ; Sourdin, ).…”

Section: Time Discounting and Debt‐holding Behaviourmentioning

confidence: 99%

Hyperbolic Discounting, Borrowing Aversion and Debt Holding

Ikeda

Kang²

2015

Japanese Economic Review

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Analysis of an original Internet-based survey reveals that debt holding is related to time discounting through: (i) present bias, measured by the degree of declining impatience in the generalized hyperbolic discount function; (ii) borrowing aversion, captured by a sign effect in that future losses are discounted at lower rates than future gains; and (iii) impatience, measured by the overall discount rate. Hyperbolic respondents are classified naïve if their answers reveal them to be time-inconsistent procrastinators, and otherwise sophisticated. Naïve respondents with more steeply declining impatience are more likely to be debtors. The sign effect relates negatively to borrowing. Survey responses indicative of high or declining impatience are associated with credit card borrowing and other overborrowing indicators. JEL Classification Numbers: D91, D14, D03.bs_bs_banner First, we specify the discount function in the form of a "generalized hyperbolic discount function" (Loewenstein and Prelec, 1992), which is characterized by two parameters. One parameter (α) indicates the degree of hyperbolic deviation from exponential discounting, and the other (γ) determines the intercept. We adduce the two parameters for each individual from responses to hypothetical questions regarding immediate future choices and distant future choices. Each individual's α value measures his or her degree of declining impatience. We find that this measure is associated with debt behaviour in the way predicted. The inferred individual values of parameter γ are combined with other discount rates to construct each individual's degree of impatience.Second, we distinguish the naïve, who do not expect that as time passes their impatience for given points in the future is going to rise, and the sophisticated, who correctly anticipate the future incidence of their own preference reversals and behave consistently with what their future impatient "selves" would do. Theory predicts that hyperbolically discounting naïve consumers display time-inconsistent overborrowing, whereas sophisticated people may somehow forestall their own undesirable inclination to overborrow (e.g. Phelps and Pollack, 1968;O'Donoghue and Rabin, 1999;Heidhues and Köszegi, 2010). To examine the validity of the theoretical predictions, we asked respondents two questions regarding their behavioural tendencies. One is how likely they were to procrastinate in doing onerous homework assignments during school vacations during childhood. The other is how late did they plan to do the particular homework assignments. Using the response data, we divide hyperbolic respondents into naïve ones, who self-reported unplanned procrastination, and sophisticated ones, who did not. We show how the effect of hyperbolic discounting on debt holdings depends on whether the respondent is naïve or sophisticated.As the third novelty, we examine the association between time discounting and inclination toward overborrowing, which is revealed by borrowing on credit cards, and the experiences of having unsecured...

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“…Households that report low levels of self-control are more likely to invest in illiquid pensions and less likely to hold very liquid forms of assets (Sourdin 2008). Contrary to impulsive behavior, there is also evidence of inertia or inaction in investment choice, characterized by individuals assuming the investment allocation established by default (Madrian and Shea 2001) which tend to be more conservative and of stable value (Choi et al 2001).…”

Section: Asset Allocation (51 Papers)mentioning

confidence: 99%

Retirement Saving Choices: Review of the Literature and Policy Implications

Gough

Niza

2011

Population Ageing

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Pension reforms in many countries have resulted in more choice and risk to individuals, decreasing the dependability on State public pensions. However, it is not clear how research has addressed this issue and how much is know about retirement saving decisions. With this paper, we provided two major contributions to the literature on retirement saving. As a starting point, we developed a general chart of retirement saving choices, extending the work of Hurd and Panis (2006). These authors focused exclusively on choices at job change or retirement age and we extended their diagram to all main decisions at each stage of retirement saving, providing a more comprehensive framework. We then used this diagram as the yardstick to perform the systematic review and evaluate the breadth of research in the last 20 years. We found 130 papers and identified the most studied retirement choices and the under-researched areas. Most papers focused on asset allocation, decision to save and contribution rate. Less attention was given to decisions at retirement age and voluntary savings. Furthermore, very few papers studied the psychological and social influences in retirement saving decisions. Policy implications and future research are discussed.

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Pension contributions as a commitment device: Evidence of sophistication among time-inconsistent households

Cited by 13 publications

References 33 publications

The Role of Culture in Health Reporting Bias

The Role of Culture in Health Reporting Bias

Hyperbolic Discounting, Borrowing Aversion and Debt Holding

Retirement Saving Choices: Review of the Literature and Policy Implications

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