David Laibson
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David Isaac Laibson is a professor of economics at Harvard University, where he has taught since 1994. His research focuses on macroeconomics, intertemporal choice, behavioral economics and neuroeconomics.
Laibson was born 26 June 1966, the son of Ruth and Peter Laibson; and grew up in Haverford, PA. He received an A.B. (summa) from Harvard in 1988, studying under Benjamin M. Friedman, and went on to study at the London School of Economics (MSc. in Econometrics and Mathematical Economics) where he was a recipient of a Marshall Scholarship. He received his PhD from MIT in 1994 and joined the faculty at Harvard once he graduated. He has since gained tenure. He is married to the mathematician Nina Zipser, and they have a young son, Max.
At Harvard, he teaches a popular undergraduate class on "Psychology and Economics". In addition he teaches Graduate courses on Macroeconomics, Behavioral Economics and Dynamic Programming. His research has been published in prestigious journals such as the QJE, AER, JEP, Econometrica, and Science. Professor Laibson is perhaps best known within economics for his work on time inconsistency, especially his model of quasi-hyperbolic discounting. One of his most prominent early contributions has been the "Golden Eggs and Hyperbolic Discounting" paper in QJE, 1997 where he studied the intertemporal behavior of a time-inconsistent consumer. This work provides a tractable model for self-control problems, in which agents have difficulty sticking to their longterm goals. Agents in Professor Laibson's models generally value "commitment devices," such as 401(k) plans or housing equity, that let them accumulate assets without as much temptation to splurge. These models also explain the "debt puzzle," that American consumers demonstrate both short-run impatience and long-run patience in their lifecycle savings decisions. Professor Laibson has since developed hyperbolic discounting research in many directions, from more advanced theoretical models to computational macroeconomics to conceptual applications.
His own applications of his models have focused primarily on retirement savings, with considerable empirical work on 401(k) plans. He has acquired access to a proprietary dataset of the 401(k) plan account information for several dozen companies, which has let him look empirically at the effects of various 401(k) plan designs and on the investment strategies of the plan participants. Perhaps the most important result to come from this research is that plan participants tend to follow the "path of least resistance," showing remarkable responsiveness to defaults and other context effects from plan design. For example, a company can dramatically increase participation in its 401(k) plan if it moves to a default of automatically enrolling employees in the 401(k) plan unless they take a minor step to opt out. However, the employees tend to stick at the default contribution rates and investment allocations.
Much of this theoretical and empirical work has been co-authored with Brigitte Madrian, James Choi, Andrea Repetto, and Jeremy Tobacman, among many others. Professor Laibson's quasi-hyperbolic discounting models have also been extended and applied to addiction by Matthew Rabin, Ted O'Donoghue, and Jonathan Gruber, among others.
Professor Laibson's second most important line of research, after savings and self-control, is models of bounded rationality in markets, generally co-authoring papers with Xavier Gabaix, among others. He has recently begun working on neuroeconomics.
[edit] External links
- The Psychology of Savings and Investment, a series of three talks by David Laibson at the London School of Economics and Political Science, Nov 19-21, 2007.
