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The Impact of Education on the Subjective Discount Rate in Ugandan Villages

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  • Bauer, Michal

    (Charles University, Prague)

  • Chytilová, Julie

    (Charles University, Prague)

Abstract

Heterogeneity in time discounting may reinforce the existing barriers to save and invest faced by rural populations in developing countries. We elicit a subjective discount rate for a varied sample of Ugandan villagers. In accordance with other studies, we have found the discount rate to decrease with education. We examine this correlation further by testing the causal effect of education and exploit two different sources of its variation: school frequency across villages and the number of the respondents' school-going years that overlap with the era of the dictator Idi Amin's rule. For men, we find that education has a significant impact on their discount rate, similar in magnitude for both types of instruments and robust to observable characteristics. This finding highlights the importance of education in development.

Suggested Citation

  • Bauer, Michal & Chytilová, Julie, 2009. "The Impact of Education on the Subjective Discount Rate in Ugandan Villages," IZA Discussion Papers 4057, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4057
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    More about this item

    Keywords

    economic development; education; Uganda; patience; time discounting;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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