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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)

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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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Publisher 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: 2010 pages
Date of creation: Mar 2009
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Publication status: forthcoming in: Economic Development and Cultural Change, 2010
Handle: RePEc:iza:izadps:dp4057

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

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Find related papers by JEL classification:
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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References listed on IDEAS
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    Other versions:
  3. McKenzie, David J & Woodruff, Christopher, 2006. "Do Entry Costs Provide an Empirical Basis for Poverty Traps? Evidence from Mexican Microenterprises," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 3-42, October.
    Other versions:
  4. Lucia Breierova & Esther Duflo, 2004. "The Impact of Education on Fertility and Child Mortality: Do Fathers Really Matter Less Than Mothers?," NBER Working Papers 10513, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Camerer, Colin F. & Hogarth, Robin M., 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Working Papers 1059, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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  7. Akresh, Richard & de Walque, Damien, 2008. "Armed conflict and schooling : evidence from the 1994 Rwandan genocide," Policy Research Working Paper Series 4606, The World Bank. [Downloadable!]
    Other versions:
  8. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier. [Downloadable!] (restricted)
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  13. 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. [Downloadable!]
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