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Case Western Reserve University and NBER

By Eric Bettinger and Robert Slonim

Abstract

(Corresponding Author) Recent policy initiatives offer cash payments to children (and often their families) to induce better health and educational choices. These policies implicitly assume that children are especially impatient (i.e., have high discount rates); however, little is known about the nature of children's patience, how it varies across children, and whether children can even make rational intertemporal choices. This paper examines the inter-temporal choices of five to sixteen year old children in an artefactual field experiment. We examine their choices between varying levels of compensation received in two or four months in the future and in zero or two months in the future. We find that children’s choices are consistent with hyperbolic discounting, boys are less patient than girls, older children are more patient and that mathematical achievement test scores, private schooling and parent’s patience are not correlated with children’s patience. We also find that although more than 25 percent of children do not make rational inter-temporal choices within a single two-period time frame, we cannot find variables that explain this behavior other than age and standardized mathematical achievement test scores

Topics: Experimental Economics, Children, Inter-temporal Choice
Year: 2006
OAI identifier: oai:CiteSeerX.psu:10.1.1.418.222
Provided by: CiteSeerX
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