Tommy Jen Widget Test

Widget 12.1: Conventional Discounting, Present Bias, and Saving

This widget illustrates the role of conventional discounting (δ < 1) and present bias (β < 1) on consumption and saving. The household wealth is w=$120. Use the first slider to choose a value for the present-bias parameter (β) and the second slider to choose a value for the conventional discounting parameter (δ). The widget shows the mix of consumption in period 1 (c₁) and period 2 (c₂). For the initial graph, β=δ=1 and c₁=c₂.