Time and Risk Preference in Japan

Friday, 3 July 2015: 4:00 PM-5:30 PM
CLM.3.04 (Clement House)
Markus Heckel, Goethe University, Frankfurt, Germany
Na Zou, Goethe University, Frankfurt am Main, Germany
Economic success is widely perceived to be linked to the basic features of human preferences. The addition of a psychological component of desire in order to arrive at a maximizing theory of rational choice dates back to Bentham (see Bentham, 1789). In this study, we intend to analyze the differences in time preference across individuals and nations to test for the relationship between time preference, happiness and consumption behavior. A myriad of researches have examined the relationship between time preference and consumption behavior (e.g. Epstein 1987), the relationship between happiness and consumption (e.g. Guven 2012) and the relationship between time preference and happiness (e.g. Ifcher and Zarghamee 2011). However, to our knowledge, no study has linked the three features together yet.  

Applying the data from the panel survey of the Preference Parameters Study of Osaka University not only allows us to extend the understanding of the relationship between time preference, happiness and consumption behavior in a longitudinal data analysis in different countries (China, Japan and the US), but also provides a cross-country comparison among these three large economies. Detailed psychological questions and demographic information also offer extensive controls for addressing potential regression analysis bias. This study will add empirical evidence to behavioral economics, which is typically lacking in longitudinal surveys and cross-country comparisons.

This study is part of our research on "Employee Wellbeing in China and Japan" of the "Protecting the Weak" project of Goethe University Frankfurt. The project is funded by the Volkswagen Foundation.


Bentham, J (1789): An introduction to the principles of morals and legislation. 1970 edn, London: Athlone Press.

Epstein, Larry G. (1987), “The Global Stability of Efficient Intertemporal Allocations,” Econometrica, LV, 329–55.

Guven, C. (2012). Reversing the question: Does happiness affect consumption and savings behavior? Journal of Economic Psychology, 33(4), 701-717.

Ifcher, J., & Zarghamee, H. (2011). Happiness and time preference: The effect of positive affect in a random-assignment experiment. The American Economic Review, 3109-3129.