Economic Decision-making in Poverty Depletes Behavioral Control
AbstractEconomic theory and common sense suggest that time preference can cause or per- petuate poverty. Might poverty also or instead cause impatient or impulsive behavior? This paper reports a randomized lab experiment and a partially randomized field ex- periment, both in India, and analysis of the American Time Use Survey. In all three studies, poverty is associated with diminished behavioral control. The primary contri- bution is to isolate the direction of causality from poverty to behavior; three theoretical mechanisms from psychology cannot be deffinitively separated. One supported expla- nation is that poverty, by making economic decision-making more difficult for the poor, depletes cognitive control.
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Bibliographic InfoPaper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 1293.
Date of creation: Dec 2010
Date of revision:
impatient; impulsive behavior; poverty; psychology; cognative control;
Find related papers by JEL classification:
- D19 - Microeconomics - - Household Behavior - - - Other
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other
- J19 - Labor and Demographic Economics - - Demographic Economics - - - Other
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