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

  • Bauer, Michal

    ()

    (Charles University, Prague)

  • Chytilová, Julie

    ()

    (Charles University, Prague)

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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4057.

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Length: 40 pages
Date of creation: Mar 2009
Date of revision:
Publication status: published in: Economic Development and Cultural Change, 2010, 58 (4), 643–669
Handle: RePEc:iza:izadps:dp4057
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  2. Akresh, Richard & de Walque, Damien, 2008. "Armed conflict and schooling : evidence from the 1994 Rwandan genocide," Policy Research Working Paper Series 4606, The World Bank.
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  7. Michal Bauer & Julie Chytilová, 2009. "Do children make women more patient? Experimental evidence from Indian villages," Working Papers IES 2009/10, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2009.
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