Income Smoothing and Self-Control: The Case of Schoolteachers.
Approximately one-half of California's Unified School Districts give teachers a choice of receiving their annual salaries in 10 or 12 monthly payments. Intertemporal utility maximization d la Irving Fisher suggests that they should choose 10 payments and earn interest on their savings. But about 50%...
| Publicado en: | Economic Inquiry Vol. 43; no. 4; pp. 823 - 831 |
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| Autores principales: | , |
| Formato: | Artículo |
| Publicado: |
Wiley-Blackwell
October 2005
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| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | Approximately one-half of California's Unified School Districts give teachers a choice of receiving their annual salaries in 10 or 12 monthly payments. Intertemporal utility maximization d la Irving Fisher suggests that they should choose 10 payments and earn interest on their savings. But about 50% of the teachers choose 12 installments, even though when summed over a reasonable period the forgone interest can be considerable. This behavior can be explained by the cost of exercising self-control and by Laibson's model of hyperbolic discounting. A survey of teachers supports this interpretation. (JEL D91, D12) Reprinted by permission of the publisher. |
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