Date of Award
Bachelor of Arts
This study will investigate whether people prefer spending their cash on hand for instantaneous benefits, or delay consumption for future returns, and the impact of their mood on their spending habits. Past studies find that one’s state of happiness immensely contributes to his or her willingness to spend money; happier, satisfied individuals tend to spend a lot less than dissatisfied ones. However, few studies focus on the impact of loss aversion on people’s time preferences towards money. The goal of this paper is to measure not only the impact of happiness as the same mood-congruent effect on time preferences but also that of loss aversion using lotteries that are announced in different time periods. Our statistical analysis goes in parallel with the literature on mood change and delaying consumption: those with higher degree of happiness appears to opt for the lottery that is higher compensated and announced in later time period, after accounting for demographic information.
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Aytac, Deniz, "Our Temptation for Benjamins: Can framing spending habits allow us to overcome present bias?" (2020). Economics Student Theses and Capstone Projects. 153.