Template-Type: ReDIF-Paper 1.0
Author-Name: Thomas Mayer
Author-Name-First: Thomas
Author-Name-Last: Mayer
Author-Name: Thomas Russell
Author-Name-First: Thomas
Author-Name-Last: Russell
Author-Workplace-Name: Department of Economics, University of California Davis
Title: Income Smoothing and Self Control: The Case of Schoolteachers
Abstract: Close to half the California school districts let teachers choose whether to receive their salaries ten monthly payments or in twelve. Fisherine intertemporal maximization implies that they should choose ten payments and earn interest on their savings for their summer. But about half choose twelve installments , even though when summed over a reasonable period the foregone interest is considerable. This 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.
Length: 20
File-URL: https://repec.dss.ucdavis.edu/files/5JMDANX7CHNrzbWa3Ui9gXDN/02-8.pdf
File-Format: application/pdf
Number: 281
Classification-JEL: D91, D12
KeyWords: Self Control, Intertemporal Utility Maximization
Creation-Date: 20030202
Handle: RePEc:cda:wpaper:281