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High discount rates: - An artifact caused by poorly framed experiments or a result of people being poor and vulnerable?

  • Holden, Stein

    ()

    (Centre for Land Tenure Studies, Norwegian University of Life Sciences)

This study revisits the issue whether poverty and shocks are associated with high discount rates by using an incentive compatible Multiple Price List approach in a poor rural population in Africa where a substantial share of the population had been affected by drought in the recent rainy season. Randomized treatments included tests for present bias, magnitude effects and time horizon effects. While the study revealed significant present bias, magnitude and time horizon effects, average rates of time preference remained high after correcting for risk aversion. Exposure to drought increased the average rates of time preference by 42-47%.

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File URL: http://www.umb.no/statisk/clts/clts/clts_wp08_2013.pdf
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Paper provided by Centre for Land Tenure Studies, Norwegian University of Life Sciences in its series CLTS Working Papers with number 8/13.

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Length: 30 pages
Date of creation: 18 Jun 2013
Date of revision:
Handle: RePEc:hhs:nlsclt:2013_008
Contact details of provider: Postal: Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway
Phone: (+47) 6496 5700
Fax: (+47) 6494 3012
Web page: http://www.umb.no/clts

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  17. Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer, vol. 2(2), pages 107-127, December.
  18. Mette Wik & Tewodros Aragie Kebede & Olvar Bergland & Stein Holden, 2004. "On the measurement of risk aversion from experimental data," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2443-2451.
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