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Risk and Time Preference on Schooling:Experimental Evidence from a Low-Income Country

Author

Listed:
  • Yuki Tanaka

    (National Graduate Institute for Policy Studies)

  • Takashi Yamano

    (International Rice Research Institute)

Abstract

Educational investment involves risks and long-term commitment, and the degree of risk aversion or patience of parents could play a vital role in the schooling decision. Yet, there are few studies analyzing the impact of such preferences on educational investment. This paper utilizes a unique dataset with a large-scale field experiment of preferences and estimates the impacts of the patience and risk aversion of the parents on school attendance, delayed enrollment, and the education expenditure of their children in Uganda. Our results show that the risk aversion of the parent delays enrollment of young children, especially boys. This could be explained by parents’ security concerns for their young children. Girls of impatient parents have high attendance rates when they are young (6 – 9 years old) but have low attendance rates when they are older (10 – 13 years old). Boys aged 10 to 13 have low attendance rates if their parents have a high present bias. Finally, the patience of the parents increases the education expenditure.

Suggested Citation

  • Yuki Tanaka & Takashi Yamano, 2015. "Risk and Time Preference on Schooling:Experimental Evidence from a Low-Income Country," GRIPS Discussion Papers 14-24, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:14-24
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    File URL: https://grips.repo.nii.ac.jp/?action=repository_action_common_download&item_id=1160&item_no=1&attribute_id=20&file_no=1
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    References listed on IDEAS

    as
    1. Yuki Tanaka & Alistair Munro, 2014. "Regional Variation in Risk and Time Preferences: Evidence from a Large-scale Field Experiment in Rural Uganda," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 23(1), pages 151-187.
    2. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    3. Kihlstrom, Richard E. & Mirman, Leonard J., 1974. "Risk aversion with many commodities," Journal of Economic Theory, Elsevier, vol. 8(3), pages 361-388, July.
    4. Hanan G. Jacoby & Emmanuel Skoufias, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 311-335.
    5. Wölfel, Oliver & Heineck, Guido, 2012. "Parental risk attitudes and children's secondary school track choice," Economics of Education Review, Elsevier, vol. 31(5), pages 727-743.
    6. Elaine Meichen Liu, 2008. "Time to Change What to Sow: Risk Preferences and Technology Adoption Decisions of Cotton Farmers in China," Working Papers 1064, Princeton University, Department of Economics, Industrial Relations Section..
    7. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    8. Sawada, Yasuyuki & Lokshin, Michael, 2009. "Obstacles to school progression in rural Pakistan: An analysis of gender and sibling rivalry using field survey data," Journal of Development Economics, Elsevier, vol. 88(2), pages 335-347, March.
    9. Alistair Munro & Yuki Tanaka, 2014. "Risky rotten kids: an experiment on risk attitudes amongst adolescents in rural Uganda," GRIPS Discussion Papers 14-01, National Graduate Institute for Policy Studies.
    10. Sharada Weir, 2011. "Parental Attitudes and Demand for Schooling in Ethiopia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 20(1), pages 90-110, January.
    11. Levhari, David & Weiss, Yoram, 1974. "The Effect of Risk on the Investment in Human Capital," American Economic Review, American Economic Association, vol. 64(6), pages 950-963, December.
    12. Lincove, Jane Arnold, 2015. "Improving Identification of Demand-Side Obstacles to Schooling: Findings from Revealed and Stated Preference Models in Two SSA Countries," World Development, Elsevier, vol. 66(C), pages 69-83.
    13. Yamano, Takashi & Shimamura, Yasuharu & Sserunkuuma, Dick, 2006. "Living Arrangements and Schooling of Orphaned Children and Adolescents in Uganda," Economic Development and Cultural Change, University of Chicago Press, vol. 54(4), pages 833-856, July.
    14. Nishimura, Mikiko & Yamano, Takashi, 2013. "Emerging Private Education in Africa: Determinants of School Choice in Rural Kenya," World Development, Elsevier, vol. 43(C), pages 266-275.
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    Cited by:

    1. Charlotte Ringdal & Hoem Sjursen, 2017. "Household bargaining and spending on children: Experimental evidence from Tanzania," WIDER Working Paper Series 128, World Institute for Development Economic Research (UNU-WIDER).

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