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Poverty and Time Preference

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  • Leandro Carvalho

Abstract

This paper estimates the time preference of poor households in rural Mexico. It uses data from a program that randomly assigned communities to treatment and control and paid transfers to poor households in treatment communities. The randomization implies that differences in consumption between control and treatment households are due to the program. A buffer-stock model predicts how the response of consumption to transfers depends on the discount factor. It estimates this parameter by matching simulated to sample treatment effects on consumption. The estimates being very low, it concludes that poor households are very impatient or a richer model is needed.

Suggested Citation

  • Leandro Carvalho, 2010. "Poverty and Time Preference," Working Papers WR-759, RAND Corporation.
    • Handle: RePEc:ran:wpaper:wr-759
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    References listed on IDEAS

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    Cited by:

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    2. Thierry Bréchet & Natali Hritonenko & Yuri Yatsenko, 2013. "Adaptation and Mitigation in Long-term Climate Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(2), pages 217-243, June.
    3. Contreras Suarez, Diana & Cameron, Lisa A., 2016. "Conditional Cash Transfers: Do They Change Time Preferences and Educational Aspirations?," IZA Discussion Papers 10309, Institute of Labor Economics (IZA).
    4. Aksoy, Billur & Palma, Marco A., 2019. "The effects of scarcity on cheating and in-group favoritism," Journal of Economic Behavior & Organization, Elsevier, vol. 165(C), pages 100-117.
    5. Razafimahatratra, Hanitriniaina Mamy & Bignebat, Céline & David-Benz, Hélène & Bélières, Jean-François & Penot, Eric, 2021. "Tryout and (Dis)adoption of conservation agriculture. Evidence from Western Madagascar," Land Use Policy, Elsevier, vol. 100(C).
    6. Johannes Bettin & Meike Wollni, 2019. "Environmental Concern, Income, and Nature Experience in India," Sustainability, MDPI, vol. 11(2), pages 1-22, January.
    7. Eesha Sharma & Stephanie Tully & Xiang Wang, 2022. "Scarcity and Intertemporal Choice," Working Papers 22-27, Federal Reserve Bank of Philadelphia.
    8. Billur Aksoy & Marco A. Palma, "undated". "The Effects of Scarcity on Cheating and In-Group Favoritism," Working Papers 20180918-001, Texas A&M University, Department of Economics.
    9. Borissov, K. & Pakhnin, M., 2018. "A Division of Society into the Rich and the Poor: Some Approaches to Modeling," Journal of the New Economic Association, New Economic Association, vol. 40(4), pages 32-59.

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    More about this item

    Keywords

    simulation; consumption; time preference; randomized experiment; poverty;
    All these keywords.

    JEL classification:

    • 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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