1,339 research outputs found
A Model of Human Capital, Time Discounting and Economic Growth
Endogenous time discounting is introduced in a two-period human-capital-driven growth model: subjective discount rate depends upon the level of human capital. This assumption accords strongly with the micro-level evidence. In the model an individual optimizes consumption over two periods. Low human capital societies do not grow fast since high discount rate discourages schooling as the major form of savings. This implication is further reinforced by modeling the efficiency of schooling in the context of population pressure which is also driven by low human capital. The model may produce multiple development regimes and it illustrates wider role of education in tackling possible development traps.banking; growth, human capital, education, time discounting, discount rate, poverty
Do children make women more patient? Experimental evidence from Indian villages
This paper studies gender heterogeneity in preferences. We used experimental methods to elicit the subjective discount rate and attitude toward risk in Indian villages. Results show that women made more patient choices than men and that their discount rate is related to number of children. No gender difference is found for individuals without children. Women’s discount rate declines up to four children, whereas men’s does not decline. Our findings suggest that conflictual interactions within a household are more likely when a couple has young children, and hence, spousal heterogeneity in patience is at its greatest.subjective discount rate; gender; experiment; India
The Impact of Education on the Subjective Discount Rate in Ugandan Villages
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.patience, education, time discounting, economic development, Uganda
Women, Children and Patience: Experimental Evidence from Indian Villages
In this paper we study the link between women's responsibility for children and their preferences. We use a large random sample of individuals living in rural India, incentive compatible measures of patience and risk aversion, and detailed survey data. We find more patient choices among women who have a higher number of children. The age of children matters: The link with patience is specific for children below 18 years old, and the highest level of patience is associated with having three children. We do not observe this link among men. Taken together, we find significant gender differences in patience that are predicted by a higher number of children. The results are robust to controlling for age, education, income constraints, and individual and location characteristics. These findings suggest an important context when the spending preferences of spouses diverge, and support the view that empowering women in developing countries should lead to more future-oriented choices of households.time discounting, gender, children, experiment, India
Does Education Matter in Patience Formation? Evidence from Ugandan Villages
The paper aims to contribute to the understanding of why there is a lack of domestic saving and investment in rural parts of sub-Saharan Africa. It focuses on heterogeneity in inter-temporal preferences as a possible explanation of this important puzzle. The study is based on a unique experimental data set collected from 856 respondents in Ugandan villages and scrutinizes how individual patience – measured by the discount rate – is formed. The results suggest that Ugandan respondents are substantially less patient than their counterparts in similar experimental studies undertaken in developed countries and South Asia. We find a strong negative association between the level of education and the individual discount rate. Furthermore, we took advantage of the Ugandan education reform in 1996 and varying school frequency to demonstrate the causal relationship stemming from education to patience. The estimates suggest that an additional year at school decreases the discount rate on average by 35 percentage points after controlling for other characteristics (age, income group, sex, marital status and clan linkage). Our findings strongly accord with patience understood as a non-cognitive ability which needs to be taught by parents, learnt at school and promoted by social norms. The Ugandan responses, therefore, propose a new way in which education may influence development in sub-Saharan Africa – by shaping individual patience.Time preference; patience; discount rate; education; savings; economic development; field survey; sub-Saharan Africa
Effects of Education on Determinants of High Desired Fertility: Evidence from Ugandan Villages
High desired fertility is an important factor contributing to the population explosion in sub-Saharan Africa. On a broad sample of 910 respondents from the rural areas of Uganda this paper assesses the impact of health risks, economic contributions from children, traditional community institutions and unequal position of women on desired fertility levels. The paper further scrutinizes how these determinants are affected by education. The results show that fear of diseases and involvement in traditional clan institutions increase desired number of children. Interestingly, these effects can be remarkably mitigated through education that improves the individual health prevention as well as reduces the influence of clans. Economic incentives for having children seem to be less significant than other factors. In addition, a very significant difference in desired fertility between men and women emerges, nevertheless education leads both to reduction and convergence of their desired fertility levels. All these findings suggest that education stimulates a complex change in fertility preferences and underline the importance of education as efficient tool for reducing rapid population growth.fertility; education; development; demography
Behavioral Foundations of Microcredit: Experimental and Survey Evidence From Rural India
This paper draws a link between self-control problems and the contractual mechanisms of microcredit. We use a series of “lab experiments in the field” which were designed to elicit measures of time discounting on a sample of 573 individuals in rural Karnataka, India. Evidence from the experiments were integrated with individual survey data on the economic and financial lives of villagers. One third of participants made choices consistent with hyperbolic preferences (more impatient now than in the future), and would be made better off if they could discipline their time inconsistent preferences. While hyperbolic preferences have been often associated with saving behavior, we describe links to borrowing as well. We find that “hyperbolic” women save a lower share of their savings at home and save less in total levels. Women with hyperbolic preferences are also more likely to borrow--and to do so through microcredit institutions specifically. The finding highlights the role of the fixed and frequent installment schedule ubiquitous in microcredit contracts. While microcredit contracts are celebrated for mitigating informational asymmetries, the evidence suggests that they also offer helpful structure for people with self-discipline problems who seek to accumulate capital but who lack suitable contractual saving devices.banking; : time preference, hyperbolic discounting, loan contracts, microfinance
Effects of Education on Determinants of High Desired Fertility: Evidence from Ugandan Villages
High desired fertility is an important factor contributing to the population explosion in sub-Saharan Africa. On a broad sample of 910 respondents from rural areas of Uganda this paper assesses the impact of health risks, economic contributions from children, traditional community institutions and unequal position of women on desired fertility levels. The paper further scrutinizes how these determinants are affected by education. The results show that fear of disease and involvement in traditional clan institutions increase the desired number of children. Interestingly, these effects can be remarkably mitigated through education, which improves individual health prevention as well as reduces the influence of clans. The economic incentives for having children seem to be less significant than other factors. In addition, a very significant difference in desired fertility between men and women emerges; nevertheless, education leads to both reduction and convergence of their desired fertility levels. All these findings suggest that education stimulates a complex change in fertility preferences and underline the importance of education as an efficient tool for reducing rapid population growth.fertility, education, development, demography
Opomíjená heterogenita lidí aneb Proč Afrika dlouhodobě neroste / On forgotten heterogeneity and absence of long-term growth in Africa [available in Czech only]
There is hardly any bigger economic tragedy than poor economic development of sub-Saharan Africa. The persistent character of its slow growth or even decline is not possible to explain when using standard growth theories and cross-coutry data. We have suggested a classification framework for existing theories and it allowed us to show that all these approaches (despite their broadness and different policy implications) assume that people’s preferences everywhere in the world can be embodied in Homo oeconomicus concept. Growth incompatible behavior is then explained by unfavorable environment being it geography, colonial legacy or bad policy environment. Our aim is to highlight that current concepts omit the possible heterogeneity of people resulting from culture, very poor education level and health conditions. In our view, explanation of African specific behavioral patterns can contribute to deeper understanding, why there is lack of investments and lack of specialization; and thus why there is no growth in sub-Saharan Africa.economic growth; sub-Saharan Africa; poverty trap; governance; behavioral patterns
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Using Survey Questions to Measure Preferences: Lessons from an Experimental Validation in Kenya
Can a short survey instrument reliably measure a range of fundamental economic preferences across diverse settings? We focus on survey questions that systematically predict behavior in incentivized experimental tasks among German university students (Becker et al. 2016) and were implemented among representative samples across the globe (Falk et al. 2018). This paper presents results of an experimental validation conducted among low-income individuals in Nairobi, Kenya. We find that quantitative survey measures -- hypothetical versions of experimental tasks -- of time preference, attitude to risk and altruism are good predictors of choices in incentivized experiments, suggesting these measures are broadly experimentally valid. At the same time, we find that qualitative questions -- self-assessments -- do not correlate with the experimental measures of preferences in the Kenyan sample. Thus, caution is needed before treating self-assessments as proxies of preferences in new contexts
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