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The Impact of Education on the Subjective Discount Rate in Ugandan Villages

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Author Info

  • Bauer, Michal

    ()
    (Charles University, Prague)

  • Chytilová, Julie

    ()
    (Charles University, Prague)

Abstract

Heterogeneity in time discounting may reinforce the existing barriers to save and invest faced by rural populations in developing countries. We elicit a subjective discount rate for a varied sample of Ugandan villagers. In accordance with other studies, we have found the discount rate to decrease with education. We examine this correlation further by testing the causal effect of education and exploit two different sources of its variation: school frequency across villages and the number of the respondents' school-going years that overlap with the era of the dictator Idi Amin's rule. For men, we find that education has a significant impact on their discount rate, similar in magnitude for both types of instruments and robust to observable characteristics. This finding highlights the importance of education in development.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4057.

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Length: 40 pages
Date of creation: Mar 2009
Date of revision:
Publication status: published in: Economic Development and Cultural Change, 2010, 58 (4), 643–669
Handle: RePEc:iza:izadps:dp4057

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Related research

Keywords: economic development; education; Uganda; patience; time discounting;

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References

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  1. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2006. "Preferences, Poverty and Politics: Experimental and Survey Data from Vietnam," Levine's Bibliography 321307000000000054, UCLA Department of Economics.
  2. Michal Bauer & Julie Chytilová, 2009. "Do children make women more patient? Experimental evidence from Indian villages," Working Papers IES 2009/10, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2009.
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  4. Michal Bauer & Julie Chytilová & Jonathan Morduch, 2008. "Behavioral Foundations of Microcredit: Experimental and Survey Evidence From Rural India," Working Papers IES 2008/28, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2008.
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  12. Glenn Harrison & Morten Lau & Elisabet Rutstrom & Melonie Williams, 2005. "Eliciting risk and time preferences using field experiments: Some methodological issues," Artefactual Field Experiments 00063, The Field Experiments Website.
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  16. Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer, vol. 2(2), pages 107-127, December.
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Cited by:
  1. Ubfal, Diego, 2012. "How General Are Time Preferences? Eliciting Good-Specific Discount Rates," IZA Discussion Papers 6774, Institute for the Study of Labor (IZA).

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