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E-grāmata: Economics of Self-Destructive Choices

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Based on recent advances in economics, especially those in behavioral economics, this book elucidates theoretically and empirically the mechanism of time-inconsistent decision making that leads to various forms of self-destructive behavior. The topics include over-eating and obesity, over-spending, over-borrowing, under-saving, procrastination, smoking, gambling, over-drinking, and other intemperate behaviors, all of which relate to serious social problems in advanced countries.

In this book, the author attempts to construct a bridge between the basic theory of time discounting, especially as of hyperbolic discounting, and empirically observed irrational (non-classical) behavior in the various contexts just mentioned. The empirical validity of the theory is discussed using unique micro data as well as public macro data. The book proposes prescriptions for individual decision makers, whether sophisticated or naļve, to make better choices in self-control problems, and also provides policy makers with useful advice for influencing peoples decision making in the right directions.





This work is recommended not only to general readers who seek to learn how to attain better self-regulation under self-control problems. It also helps researchers who seek an overview of positive and normative implications of hyperbolic discounting, and thereby reconstruct economic theory for a better understanding of actual human behavior and the resulting economic dynamics













.
1 The Paradox of Self-Destructive Choices
1(24)
1.1 What Are Self-Destructive Behaviors?
1(3)
1.1.1 Harmful Choices
1(1)
1.1.2 Associated Self-Destructive Behaviors
2(2)
1.2 Comparing Present and Future Rewards
4(7)
1.2.1 Present or Future? Choices over Time
4(3)
1.2.2 Present-Oriented Inclination: Subjective Discount Rates
7(2)
1.2.3 Bankers' Way of Time Discounting
9(2)
1.3 Hyperbolic Discounting and Inconsistent Decisions
11(5)
1.3.1 Being Swayed by the Temptation of Immediate Rewards
11(1)
1.3.2 Self-Destructive Procrastination
12(2)
1.3.3 The Self-Control Problem
14(1)
1.3.4 "Sophisticated" People and "Naive" People
15(1)
1.4 Binding Future Selves' Hands
16(1)
1.4.1 Binding Loose Selves
16(1)
1.4.2 Freezing Assets
17(1)
1.5 Coping with Self-Destructive Behaviors
17(8)
1.5.1 Knowing Oneself: Self Signaling
18(1)
1.5.2 How to Improve Decisions and Behaviors
18(1)
1.5.3 Behavioral Economics Policy Recommendations
19(2)
Supplement A Monkeys and Chosan-Boshi?
21(1)
Supplement B Measuring Personal Discount Rates
22(3)
2 Varying Impatience
25(18)
2.1 Anomalies in Intertemporal Choices
25(1)
2.2 Smaller Amounts Are Discounted More
26(3)
2.2.1 The Magnitude Effect
26(1)
2.2.2 Increasing Proportionate Sensitivity
26(1)
2.2.3 Mental Fixed Costs for Waiting
27(1)
2.2.4 Mental Accounting
28(1)
2.3 Gains Are Discounted More Than Losses
29(6)
2.3.1 The Sign Effect
29(1)
2.3.2 Decreasing Marginal Utility
29(1)
2.3.3 Loss Bias
30(1)
2.3.4 The Sign Effect and Borrowing Aversion
31(1)
2.3.5 Delay/Speed-Up Asymmetry
32(1)
2.3.6 The Framing Effect
33(2)
2.4 Choosing Improving Sequences
35(7)
2.4.1 Choice of Gratification Sequences
35(1)
2.4.2 Choosing the Smaller Lifetime Income
36(2)
2.4.3 The Seniority-Based Wage Puzzle
38(1)
2.4.4 Improvements Yield Gratification
39(1)
2.4.5 Savoring and Habituation
39(2)
2.4.6 Sequence as Context
41(1)
2.5 Conclusions
42(1)
3 Hyperbolic Discounting and Self-Destructive Behaviors
43(24)
3.1 Introduction
43(1)
3.2 More Impatient for More Immediate Gratification
43(7)
3.2.1 Proximal Future Choice and Distal Future Choice
43(2)
3.2.2 Exponential Discounting and Hyperbolic Discounting
45(4)
3.2.3 The Matching Law
49(1)
3.3 Inconsistent Choices
50(7)
3.3.1 Dual Personality
50(1)
3.3.2 Patient Plan with Impatient Behavior
51(4)
3.3.3 Procrastinating Tasks and Preproperating Leisure
55(2)
3.3.4 Too Much Consumption and Too Little Accumulation
57(1)
3.4 Mechanism of Hyperbolic Discounting
57(7)
3.4.1 Today Is Long: Distortion in Psychological Time
57(2)
3.4.2 The Certainty Effect
59(3)
3.4.3 The Ant and the Grasshopper in the Brain
62(2)
3.5 Conclusions
64(3)
4 Self-Control Problems of the Dual Self
67(46)
4.1 Introduction
67(1)
4.2 Problems of the Dual Self
67(10)
4.2.1 The Self-Control Problem
67(1)
4.2.2 Pessimistic or Optimistic About Their Future Selves?
68(2)
4.2.3 When to Clean?: Sophistication Mitigates Procrastination
70(3)
4.2.4 Overly Abstentious Decision-Making
73(2)
4.2.5 When to See a Movie?: Sophistication Reinforces Preproperation
75(2)
4.3 Excessive Abstinence and Indulgence
77(5)
4.3.1 Self-Restraining Smart Choice to See the Grand-Prize Winning Movie
77(2)
4.3.2 Excessive Abstinence and Indulgence Due to Sophisticated Decisions
79(2)
4.3.3 Does Sophisticated Decision-Making Increase or Reduce One's Savings?
81(1)
4.4 Pitfalls of "Pursuing Larger Work"
82(2)
4.4.1 "Which Task to Work on" and "When to Work"
82(1)
4.4.2 Procrastination Caused by Pursuing Larger Tasks
83(1)
4.5 Benefit of Self-Trapping
84(3)
4.5.1 Precommitment
84(2)
4.5.2 Illiquid Assets and Education as Commitment Devices
86(1)
4.6 Theory of the "Golden Eggs"
87(10)
4.6.1 The Goose That Lays the Golden Eggs
87(1)
4.6.2 The Invalidity of the Permanent Income Hypothesis
88(4)
4.6.3 Consumption Propensity from Income Higher than That from Assets
92(1)
4.6.4 The Debt Puzzle
93(2)
4.6.5 The Ricardian Equivalence Theorem Does Not Hold
95(1)
4.6.6 Financial Innovation: Flexibility Versus Precommitment
96(1)
4.7 Naive or Sophisticated?
97(5)
4.7.1 Partially Naive
98(1)
4.7.2 Deadlines and Efficiency
99(1)
4.7.3 When to Start Studying for an Examination
100(2)
4.8 Willpower and Self-Control
102(8)
4.8.1 What Is Willpower?
102(1)
4.8.2 Willpower and Present-Oriented Tendency
103(2)
4.8.3 Willpower Budget and Efficient Self-Control
105(1)
4.8.4 Crowded Out Self-Control
106(1)
4.8.5 Depletion and Reproduction of Poverty
107(2)
4.8.6 Poverty and Adversity During Childhood
109(1)
4.9 Conclusions
110(3)
Supplement C The Tsushima Family's Precommitment
111(2)
5 Overborrowing, Overeating, and Addictive Behavior
113(40)
5.1 Introduction
113(1)
5.2 Naive Income-Consumption Cycles
114(2)
5.2.1 Allowance Cycle
114(1)
5.2.2 The Food-Stamp Nutrition Cycle
115(1)
5.2.3 The Pension-Consumption Cycle
115(1)
5.3 Hyperbolic Discounting and Debt Behavior
116(15)
5.3.1 Credit Card Loans
116(2)
5.3.2 Swayed by a Teaser Rate But End Up Paying a Higher Interest Rate
118(3)
5.3.3 Self-Destructive Behavior of Payday Loan Borrowers
121(2)
5.3.4 Hyperbolic Discounting and Debt: The Case of Japan
123(5)
5.3.5 Hyperbolic Discounting and Multiple Debts
128(1)
5.3.6 The Sign Effect and Borrowing Aversion
129(2)
5.4 Obesity and Underweight
131(9)
5.4.1 Choosing One's Body Weight Status
131(2)
5.4.2 Obese People Tend to Be Indebted
133(2)
5.4.3 Obesity as Self-Destruction
135(3)
5.4.4 Choosing Being Underweight
138(2)
5.5 Gambling, Smoking, and Drinking
140(2)
5.6 Conclusions
142(11)
Appendix: An Illustrative Model of Hyperbolic Consumers
143(3)
Supplement D Obesity Criteria: Japan and the WHO
146(1)
Supplement E "Super Size Me": The State of Obesity in the United States and Europe
147(2)
Supplement F Reporting One's Own Weight as Lighter
149(4)
6 Coping with Self-Destructive Behavior
153(28)
6.1 Introduction
153(1)
6.2 Means of Avoiding Self-Destructive Choices
154(10)
6.2.1 Taking into Account the Lenient Future Self
154(1)
6.2.2 The Self-Control Problem and Willpower That You Can Realize Only by Being Inconsistent
155(2)
6.2.3 Addressing Willpower Depletion
157(1)
6.2.4 Two Types of Commitment Device
158(1)
6.2.5 Soft Commitment Devices
158(1)
6.2.6 Personal Rules
159(2)
6.2.7 Dividing Planning Horizon into Shorter Sub-periods
161(1)
6.2.8 Rounding Up the Troops While the Enemy Is Still Weak
162(1)
6.2.9 Hard to Be Sophisticated
163(1)
6.3 Interventions That Allow Choices
164(7)
6.3.1 Libertarian Paternalism
164(1)
6.3.2 "Nudging" Decision-Makers by Changing the Default
165(1)
6.3.3 Nudging Hyperbolic People
166(2)
6.3.4 Making People Commit to Future Savings
168(1)
6.3.5 Reverse Thinking: Asymmetric Paternalism
169(1)
6.3.6 Putting It into Practice
170(1)
6.4 Considering Policies
171(7)
6.4.1 Interventions for Smoking Cessation
171(3)
6.4.2 Reducing Obesity
174(2)
6.4.3 Intervention in the Consumer Credit Market
176(2)
6.5 Issues and Future Tasks
178(2)
6.6 Conclusions
180(1)
References 181(6)
Index 187
Shinsuke Ikeda is a professor at the Institute of Social and

Economic Research (ISER), Osaka University, and serves as the director of the Research Centre of Behavioral Economics in ISER. He received a B.Com. at Kobe University in 1980 and a Ph.D. (economics) at Osaka University in 1997. He is the former president of the Association of Behavioral Economics and Finance. Dr. Ikeda has published articles on behavioral economics, macroeconomic dynamics, and asset pricing in the Journal of Finance, Journal of Health Economics, Journal of International Economics, Journal of Monetary Economics, and the International Economic Review, among others. With H. Kato, F. Ohtake, and Y. Tsutsui, he has jointly edited two volumes on behavioral economics: Behavioral Economics of Preferences, Choices, and Happiness (Springer, 2015, forthcoming); and Behavioral Interactions, Markets, and Economic Dynamics: Topics in Behavioral Economics (Springer, 2015, forthcoming).











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