Measuring self-control problems: A structural estimation

We perform a structural estimation of the preference parameters in a buffer-stock consumption model augmented with temptation disutility. We adopt a two-stage Method of Simulated Moments methodology to match our simulated moments with those observed in the US Survey ofConsumer Finances. To identify the parameters we use liquid and quasi-liquid (retirement) wealth holdings at different ages as target moments. We find evidence of a significantly positive degree of temptation, and estimates under the unrestricted model are more precise than estimates under the restricted model with no temptation. Overall, a model with temptation preferences explains better the observed target moments.

Netspar, Network for Studies on Pensions, Aging and Retirement, is een denktank en kennisnetwerk. Netspar is gericht op een goed geïnformeerd pensioendebat.

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