Time-Inconsistency and Saving Evidence from Low-Income Tax Filers

A field experiment tested a Beta-Delta model of present bias in saving decisions among low-income tax filers. The study, conducted by Damon Jones of UC Berkeley, found qualitative evidence of present-biased preferences, estimating parameters of 0.34 and 1.08 over an 8-month horizon. This translates to an annual discount rate of 164%.

Use Cases

• Modeling present-biased preferences based on the described Beta-Delta framework.
• Analyzing the impact of decision timing on savings choices based on the described tradeoff between immediate and delayed payments.
• Estimating discount rates for low-income populations based on the provided parameter estimates.
• Designing field experiments to test behavioral economic theories in real-world financial contexts.

Strengths

• Data originates from a field experiment, suggesting real-world behavioral observations.
• The description provides specific parameter estimates (0.34 and 1.08) and an annual discount rate (164%).
• Focuses on a specific, policy-relevant population: low-income tax filers.

Limitations

• Column-level documentation is absent; field semantics must be inferred after download.
• Row count is unknown, which may limit suitability assessment.
• Data may reflect temporal and participant bias inherent to the specific field experiment.

Provenance

Source

University of California, Berkeley

Collection Method

Field experiment where participants could deposit tax refunds into an illiquid account.