Monday, June 30, 2008

Potential Correlation?

Okay, I apologize in advance, here goes.

In general, would we not expect that people who save less also weigh more? The first is by definition a function of the discount rate: How much is future consumption worth relative to today's consumption?

So the discount rate measures, effectively, the pain we're willing to incur today (by saving and foregoing the utility from consumption) to receive pleasure tomorrow. Or, if you like, how much pleasure we require today in order to feel pain tomorrow.

If we compare individuals of equal income and age, the one who saves more has a lower discount rate. Hopefully this exposition is unnecessary and you already understand (better than I do) what it is.

Now, overeating works on the same mechanic: pleasure today for pain tomorrow. I would argue that what holds true for the wallet also holds true for the gut: skinny people should be savers, the overweight are spenders. Unfortunately, I know of no data set that would allow me to test this hypothesis...


Gabriel said...

You need to bring the Permament Income Hypothesis into this + life expectancy and its determinants. Saving is a PIH phenomenon.

For extra nerdiness, you'd need to bring up the posibility of people being credit contrained and poor. And notice that poor people tend to be fatter than rich people (higher rates of obesity).

Andrew said...

We could co-author if only the data existed!

BSF said...

Richard Ippolito's done an extensive survey of this literature.