Poverty and Time Preference
AbstractThis paper estimates the time preference of poor households in rural Mexico. It uses data from a program that randomly assigned communities to treatment and control and paid transfers to poor households in treatment communities. The randomization implies that differences in consumption between control and treatment households are due to the program. A buffer-stock model predicts how the response of consumption to transfers depends on the discount factor. It estimates this parameter by matching simulated to sample treatment effects on consumption. The estimates being very low, it concludes that poor households are very impatient or a richer model is needed.
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Bibliographic InfoPaper provided by RAND Corporation Publications Department in its series Working Papers with number 759.
Length: 41 pages
Date of creation: May 2010
Date of revision:
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simulation; consumption; time preference; randomized experiment; poverty;
Find related papers by JEL classification:
- 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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