Measuring time preference: Theory, methods, and applications

Measuring time preference is a fundamental challenge in both the theory and application of intertemporal decision-making. Current approaches can be broadly classified into two paradigms based on their utility representations: Money Earlier or Later (MEL) experiments and Time-Yoked Consumption experiments. This paper comprehensively reviews the theoretical evolution of these approaches. We find this evolution is characterized by the progressive relaxation of restrictive assumptions concerning the utility function, yielding substantial improvements in both measurement accuracy and practical applicability. Upon this methodological foundation, we systematically examine recent applications of time preference measurement across diverse domains, including public choice, labor market decision-making, development economics, health decisions, and political behavior. Finally, we conclude by proposing promising directions.