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Effects of Poverty On Impatience

Author

Listed:
  • Bartos, Vojtech

    (LMU Munich)

  • Bauer, Michal

    (CERGE-EI and Institute of Economic Studies)

  • Chytilova, Julie

    (Institute of Economic Studies)

  • Levely, Ian

    (Wageningen University)

Abstract

We study two psychological channels how poverty may increase impatient behavior -- an effect on time preference and reduced attention. We measured discount rates among Ugandan farmers who made decisions about when to enjoy entertainment instead of working. We find that experimentally induced thoughts about poverty-related problems increase the preference to consume entertainment early and delay work. The effect is equivalent to a 27 p.p. increase in the intertemporal rate of substitution. Using monitoring tools similar to eye tracking, a novel feature for this subject pool, we show this effect is not due to a lower ability to sustain attention.

Suggested Citation

  • Bartos, Vojtech & Bauer, Michal & Chytilova, Julie & Levely, Ian, 2018. "Effects of Poverty On Impatience," Rationality and Competition Discussion Paper Series 108, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:108
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    Citations

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    Cited by:

    1. Mika Akesaka & Peter Eibich & Chie Hanaoka & Hitoshi Shigeoka, 2023. "Temporal Instability of Risk Preference among the Poor: Evidence from Payday Cycles," American Economic Journal: Applied Economics, American Economic Association, vol. 15(4), pages 68-99, October.
    2. Sequeira, Sandra & Banerjee, Abhijit, 2020. "Spatial Mismatches and Imperfect Information in the Job Search," CEPR Discussion Papers 14414, C.E.P.R. Discussion Papers.
    3. Dietmar Fehr & Günther Fink & Kelsey Jack, 2019. "Poverty, Seasonal Scarcity and Exchange Asymmetries," NBER Working Papers 26357, National Bureau of Economic Research, Inc.
    4. Banker, Sachin & Bhanot, Syon P. & Deshpande, Aishwarya, 2020. "Poverty identity and preference for challenge: Evidence from the U.S. and India," Journal of Economic Psychology, Elsevier, vol. 76(C).
    5. Schmitt, Stefanie Yvonne & Schlatterer, Markus G., 2020. "Poverty and limited attention," BERG Working Paper Series 159, Bamberg University, Bamberg Economic Research Group.
    6. Delis, Manthos & Galariotis, Emilios & Monne, Jerome, 2021. "Financial vulnerability and seeking expert advice: Evidence from a survey experiment," MPRA Paper 107095, University Library of Munich, Germany.

    More about this item

    Keywords

    poverty; scarcity; time discounting; preferences; inattention; decision-making process;
    All these keywords.

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