High discount rates: - An artifact caused by poorly framed experiments or a result of people being poor and vulnerable?
AbstractThis study revisits the issue whether poverty and shocks are associated with high discount rates by using an incentive compatible Multiple Price List approach in a poor rural population in Africa where a substantial share of the population had been affected by drought in the recent rainy season. Randomized treatments included tests for present bias, magnitude effects and time horizon effects. While the study revealed significant present bias, magnitude and time horizon effects, average rates of time preference remained high after correcting for risk aversion. Exposure to drought increased the average rates of time preference by 42-47%.
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Bibliographic InfoPaper provided by Centre for Land Tenure Studies, Norwegian University of Life Sciences in its series CLTS Working Papers with number 8/13.
Length: 30 pages
Date of creation: 18 Jun 2013
Date of revision:
Contact details of provider:
Postal: Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway
Web page: http://www.umb.no/clts
Time preferences; poverty; climatic shocks; risk aversion; artifactual field experiment; Multiple Price List approach; Malawi;
Find related papers by JEL classification:
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
This paper has been announced in the following NEP Reports:
- NEP-AFR-2013-06-30 (Africa)
- NEP-AGR-2013-06-30 (Agricultural Economics)
- NEP-ALL-2013-06-30 (All new papers)
- NEP-CBE-2013-06-30 (Cognitive & Behavioural Economics)
- NEP-DEM-2013-06-30 (Demographic Economics)
- NEP-EXP-2013-06-30 (Experimental Economics)
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