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Does Education Affect Time Preference? Evidence from Indonesia

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  • Dawoon Jung
  • Tushar Bharati
  • Seungwoo Chin

Abstract

The paper examines the causal effect of education on time preference. To define our measure of time preference, we use responses to hypothetical questions involving intertemporal trade-offs from the Indonesian Family Life Survey. We instrument years of education with exposure to the Indonesian INPRES primary school construction program of the 1970s that caused exogenous variations in the cost of going to school. The local average treatment effect of the program was a 9 percentage point decrease in the probability of a female respondent choosing the most impatient response for every additional year of schooling. The results are robust to alternative definitions of the time preference measures but sensitive to changes in samples and specifications. The findings add to the evidence on the endogeneity of individual preference parameters that are often taken to be constant in neoclassical economics.

Suggested Citation

  • Dawoon Jung & Tushar Bharati & Seungwoo Chin, 2021. "Does Education Affect Time Preference? Evidence from Indonesia," Economic Development and Cultural Change, University of Chicago Press, vol. 69(4), pages 1451-1499.
    • Handle: RePEc:ucp:ecdecc:doi:10.1086/706496
    DOI: 10.1086/706496
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    Cited by:

    1. Paul Pelzl & Steven Poelhekke, 2023. "Democratization, leader education and growth: firm-level evidence from Indonesia," Journal of Economic Growth, Springer, vol. 28(4), pages 571-600, December.
    2. Adnan M. S. Fakir & Tushar Bharati, 2021. "Healthy, nudged, and wise: Experimental evidence on the role of cost reminders in healthy decision-making," Economics Discussion / Working Papers 21-13, The University of Western Australia, Department of Economics.
    3. Chowdhury, Shyamal & Smits, Joeri & Sun, Qigang, 2020. "Contract Structure, Time Preference, and Technology Adoption," IZA Discussion Papers 13590, Institute of Labor Economics (IZA).
    4. Chowdhury, Shyamal & Smits, Joeri & Sun, Qigang, 2020. "Contract structure, time preference, and technology adoption," GLO Discussion Paper Series 633, Global Labor Organization (GLO).
    5. Adnan M. S. Fakir & Tushar Bharati, 2022. "Healthy, nudged, and wise: Experimental evidence on the role of information salience in reducing tobacco intake," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1129-1166, June.
    6. Ahsan, Md Nazmul & Shilpi, Forhad & Emran, Shahe, 2022. "Unintended bottleneck and essential nonlinearity: Understanding the effects of public primary school expansion on intergenerational educational mobility," MPRA Paper 113047, University Library of Munich, Germany.
    7. Muhammad Fikru Rizal & Nicole Black & David W. Johnston & Rohan Sweeney, 2023. "Long‐term health effects of a school construction program," Health Economics, John Wiley & Sons, Ltd., vol. 32(8), pages 1670-1688, August.
    8. Basu, Arnab K. & Dimova, Ralitza, 2021. "Household Preferences and Child Labor in Rural Ethiopia," IZA Discussion Papers 14062, Institute of Labor Economics (IZA).
    9. Entorf, Antonia K. & Dohmen, Thomas J., 2025. "The effect of compulsory education on non-cognitive skills: Evidence from low- and middle-income countries," Economics of Education Review, Elsevier, vol. 107(C).

    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

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