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Discounting in developing countries: a pilot experiment in Timor-Leste

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Abstract

We conduct laboratory experiments in Timor-Leste designed to test if individual discount rates vary with the time horizon for which the rate is elicited. Our experiments test a design that has been successfully employed in field experiments in developed countries, and that avoids several confounds of previous procedures. We find that there is considerable heterogeneity in individual discount rates, and that this heterogeneity is associated with observable demographic characteristics. We also find evidence that is consistent with exponential discounting behavior, although our sample sizes do not allow us to definitively reject alternative specifications. We discuss modifications of our laboratory experiments that would facilitate field experiments in Timor-Leste.

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  • Anabela Botelho & Glenn W. Harrison & Lígia Costa Pinto & Elisabet E. Rutstrom & Paula Veiga, 2005. "Discounting in developing countries: a pilot experiment in Timor-Leste," NIMA Working Papers 31, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
    • Handle: RePEc:nim:nimawp:31/2005
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    Cited by:

    1. Anabela Botelho & Ligia Costa Pinto, 2002. "Hypothetical, real, and predicted real willingness to pay in open-ended surveys: experimental results," Applied Economics Letters, Taylor & Francis Journals, vol. 9(15), pages 993-996.
    2. Aslan Zorlu & Joop Hartog, 2005. "The effect of immigration on wages in three european countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(1), pages 113-151, December.
    3. Paulo Guimarães, 2002. "The state of Portuguese research in economics: an analysis based on publications in international journals," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(1), pages 3-25, March.
    4. Bonan, Jacopo & LeMay-Boucher, Philippe & Scott, Douglas, 2016. "Can Hypothetical Time Discounting Rates Predict Actual Behaviour: Evidence from a Randomized Experiment," MITP: Mitigation, Innovation and Transformation Pathways 250259, Fondazione Eni Enrico Mattei (FEEM).
    5. Oksana Tokarchuk, 2008. "Construction of time preference: an investigation of the role of elicitation method in experimental elicitation of time preference," DISA Working Papers 0808, Department of Computer and Management Sciences, University of Trento, Italy, revised 11 Nov 2008.
    6. Botelho, Anabela & Pinto, Ligia Costa, 2004. "Students' expectations of the economic returns to college education: results of a controlled experiment," Economics of Education Review, Elsevier, vol. 23(6), pages 645-653, December.
    7. Pinto, Ligia M. & Harrison, Glenn W., 2003. "Multilateral negotiations over climate change policy," Journal of Policy Modeling, Elsevier, vol. 25(9), pages 911-930, December.
    8. Anabela Botelho, 2001. "Strategic behavior at trial-The production, reporting, and evaluation of complex evidence," NIMA Working Papers 14, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
    9. Joao Cerejeira da Silva, 2002. "Identification of the Portuguese industrial districts," NIMA Working Papers 17, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
    10. Elvira Lima & Teresa J. Esquerdo, 2003. "The economic costs of alcohol misuse in Portugal," NIMA Working Papers 24, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
    11. Pedro Portugal & Ana Rute Cardoso, 2001. "Disentangling the minimum wage puzzle: an analysis of job accessions and separations from a longitudinal matched employer- employee data set," NIMA Working Papers 9, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
    12. Lloyd-Smith, Patrick & Adamowicz, Wiktor & Entem, Alicia & Fenichel, Eli P. & Rouhi Rad, Mani, 2021. "The decade after tomorrow: Estimation of discount rates from realistic temporal decisions over long time horizons," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 158-174.
    13. Ana Rute Cardoso & Priscila Ferreira, 2009. "The dynamics of job creation and destruction for university graduates: why a rising unemployment rate can be misleading," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2513-2521.
    14. Malan, Benoît & Saitone, Tina L. & Sexton, Richard J., 2015. "Marketing Cooperatives in Developing Countries: Who Joins Them and How Can They Do Better?," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205522, Agricultural and Applied Economics Association.
    15. Elvira Lima & David K. Whynes, 2003. "Finance and performance of Portuguese hospitals," NIMA Working Papers 20, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
    16. Judith Lammers & Sweder van Wijnbergen, 2007. "HIV/AIDS, Risk Aversion and Intertemporal Choice," Tinbergen Institute Discussion Papers 07-098/1, Tinbergen Institute, revised 31 Jan 2008.
    17. Tatiana Kossova & Elena Kossova & Maria Sheluntcova, 2014. "Estimating the Relationship Between Rate of Time Preferences And Socio-Economic Factors In Russia," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 39-68.
    18. Anabela Botelho & Lígia Costa Pinto & Miguel Portela & Antonio Silva, 2001. "The determinants of success in university entrance," NIMA Working Papers 13, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
    19. Tina L. Saitone & Richard J. Sexton & Benoît Malan, 2018. "Price premiums, payment delays, and default risk: understanding developing country farmers’ decisions to market through a cooperative or a private trader," Agricultural Economics, International Association of Agricultural Economists, vol. 49(3), pages 363-380, May.

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