Temporalist of Behvaioural Economics

David Laibson (born December 11, 1968, in New York City, USA) is a prominent figure in the field of behavioral economics, best known for his work on the psychology of intertemporal choice and how hyperbolic discounting influences decision-making. He has made significant contributions to understanding how people’s present-day decisions often conflict with their long-term interests, leading to behaviors like procrastination, under-saving for retirement, and impulsive consumption. His research integrates insights from psychology and economics to explore why individuals sometimes fail to act in their own best interest, contrary to the predictions of traditional economic theory.

Laibson’s key ideas focus on time-inconsistent preferences, particularly the tendency for individuals to discount future rewards at a higher rate when considering immediate versus delayed benefits. He introduced the concept of hyperbolic discounting, which suggests that people’s discount rates are not constant over time, leading to decisions that are inconsistent and often irrational. This framework has been used to explain a wide range of behaviors, from under-saving for retirement to impulsive behaviors in consumer choices. Laibson also explored the concept of mental accounting, which explains how people compartmentalize their finances and make suboptimal decisions based on mental budgets or categories.

Among Laibson’s most significant works are his widely cited paper “Intertemporal Choice” (1997), which explores the mechanisms of time inconsistency and introduces the idea of hyperbolic discounting, and his book “Golden Eggs and Hyperbolic Discounting” (2001), which integrates this theory into broader behavioral economic principles. His other major contributions include his work on the economics of self-control, which has important implications for both personal finance and public policy, particularly in areas like retirement savings and debt management.

Laibson earned his undergraduate degree in economics from Harvard University, where he also completed his Ph.D. He is currently a professor of economics at Harvard University and is a leading researcher in the intersection of psychology and economics.

Laibson’s pioneering research in behavioral economics has had a profound influence on both academic theory and public policy, particularly in the realm of consumer finance. His work has been integral in reshaping the way economists understand human decision-making and has led to practical recommendations for improving public welfare through policy interventions that account for psychological factors in economic behavior.