Economic Journal Special Issue: Foundations of Revealed Preference

May 2012, Volume 122, Issue 560, Pages 287–554

This conference issue follows on from the CEMMAP-sponsored special session on the Foundations of Revealed Preference at the RES Annual Conference, April 2011.

1. Foundations of Revealed Preference: Introduction (pages 287–294)
   Frederic Vermeulen
   

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2. Afriat’s Theorem and the Index Number Problem (pages 295–304)
   S. N. Afriat
   

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3. Afriat's Theorem and some Extensions to Choice under Uncertainty (pages 305–331)
   W. Erwin Diewert
   

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4. Revealed Preference and its Applications (pages 332–338)
   Hal R. Varian
   

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Costs of Irrationality: Procrastination

I recently read Fischer's (JEBO, 2001) paper 'Read this paper later: procrastination with time-consistent preferences.'

It builds a standard model of optimising the work-rate in completing a fixed task (e.g. writing a paper by a deadline), where the real question is about procrastination. The punchline is that if agents discount the future, then it is optimal to trade future utility for utility now, i.e. procrastinate.

Specifically the optimal work path will start at or near zero, and continuously rise at the discount rate. The endpoint condition is that agents are working flat out towards the end and complete the last sentence just at the deadline. This is the same kind of result as Hotelling (JPE, 1931) albeit in a different setting.

Theoretically this is all fine but does it match reality: what sort of discount rate is applicable over the three weeks you have to write an essay? Some may argue that the levels of time discounting needed to match this theory to data are too extreme to be plausible. Essentially, this is true. In this model, even minor tradeoffs in marginal utility (1% per day) would require an annualised discount rate of 3,783%. This is somewhat larger than the 5% discount rate that is standard in the literature.

I do not think people behave optimally, but I do think it is a benchmark we should aim for. Teachers may wish to mention to students that the only way to justify procrastination as optimal is with a discount rate in excess of 3,500%. Increasing the salience of the costs of procrastination may just spur them into action.

(Aside: teachers should probably consider this when it comes to grading those papers, too.)

Recent ESRI Publications

A number of recent ESRI publications will be of interest to some of the readers here (abridged titles).

Watson and Nolan - A social portrait of people with disabilities.

Richard Layte - Should we be worried about income inequality in Ireland?

McCrory and Layte - Breastfeeding and School Performance

Smith, Banks and Calvert - From Leaving Cert to Leaving School: A longitudinal Study

Gary Becker Lectures on Youtube

I have pointed to this a few times in various forums. 19 lectures on Human Capital by Gary Becker linked here. As yet not widely viewed, but clearly a great resource for a wide group of people. Description Below.

This series of lectures recorded during the Spring of 2010 are from ECON 343 -- Human Capital, a class taught every year by Gary Becker at the University of Chicago. In this class, Becker expounds upon the theory of Human Capital that he helped create and for which he won the Nobel Prize. In total, there are 19 lectures. Each lecture includes a short description of topics covered as well as topical keywords. The interested viewer is also provided with references to books and journal articles from Gary Becker's own original research that bear on the topics discussed in each lecture. Additionally, the viewer is also referred to the appropriate section of a freely available and informal set of student notes. These lecture notes are provided as-is and the author, Salvador Navarro Lozano cannot accept responsibility for any typos or errors. Much of the lecture material already appears in one of Gary Becker's academic books and those remain the best source of information in case of any doubts. Over the years, thousands of graduate students in Economics, Sociology, Public Policy, and other fields have benefited from the teachings of Gary Becker in his Human Capital class. We hope that by providing these lecture videos and notes that people around the world can increase their own human capital and enjoy studying this fascinating subject of human capital as taught by Gary Becker. Filmed by: Joey Brown Lecture Summaries: Jorge L. Garcia Lecture Notes: Salvador Navarro Lozano Supported by: The Becker Center at the Booth School of Business at the University of Chicago