On the other hand a model with dynamically inconsistent (quasi-hyperbolic) time preference can explain the decline, for reasonable short-term and long-term discount rates. We also investigate whether households in our sample appear to make an effort at self-control, using a strategy emphasized in the literature: a mental accounting rule that limits borrowing during the pay period and thus puts a cap on overspending. We find that households who are able to borrow, in the sense that they own a credit card, nevertheless exhibit the spending profile characteristic of credit constraints. Investigating their behavior in more detail, we find that these households treat funds from the current and future.
