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%...

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Publicado en:Economic Inquiry Vol. 43; no. 4; pp. 823 - 831
Autores principales: Mayer, Thomas, Russell, Thomas
Formato: Artículo
Publicado: Wiley-Blackwell October 2005
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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          Mayer, Thomas
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        Teachers' salaries
        Income accounting
        Self-control
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          Teachers' salaries
          Income accounting
          Self-control
      ab: 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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