Proceedings of The 5th International Conference on Research in Humanities and Social Sciences
Year: 2021
DOI:
Present Bias, Self Control and Policy Making
Jiayue Sun
ABSTRACT:
I argue that the existence of present bias can trigger self-control problems, while a modicum of people successfully recognize the problems and conquer lack of control, majority of people scarce self-discipline or can’t realize the enormous implications of self-control problems. For addressing this issue, economists suggested commitment devices which engage consumers to pay for the ‘motivation for self-control’ and tested the effectiveness of commitment devices. However, commitment devices have not been used widely and I propose three main reasons of low take-up rate. By mathematical deduction I find that self-control problems as well as limitations of external commitment devices might deepen the poverty trap and exacerbate inequality. Thus, policy-making is necessary to release the problems. In this paper I mainly discuss two policies, cigarette excise tax and social security system, including numerical details about how they are correlated to present bias and why they might help to alleviate adverse effects.
keywords: present bias, self-control, commitment devices, poverty trap and policy making.