Theory of the Firm under Uncertainty: Financing, Attitude to Risk and Output Behavior

The paper examines the risk behavior of a competitive firm under price uncertainty. In the model developed in the paper we have departed from the thought-provoking approach of Greenwald and Stiglitz (1993a), which implies solely risk averse behavior of firms due to its restrictive assumptions about firm’s financing. Through the incorporation of other plausible and more general assumptions about the firm’s financing (namely the access to the equity market, possible existence of soft budget constraint) we were able to theoretically formulate the conditions, under which the firm is induced to behave in more risk averse vs. risky manner. While the firm’s attitude to risk directly influences its willingness to produce, our results indicate that in the environment of uncertainty the price and technology are not the only important determinants of the firm’s optimal output level as is the case for the neoclassical theory of firm. The results of our model have shown that additional factors like firm’s net worth position, sensitivity of managers to bankruptcy, firm’s ability to raise new equity, softness of the budget constraint and degree of uncertainty about the future prices may play an important role for firm’s optimal output considerations.firm; uncertainty; attitude to risk; capital structure; soft budget constraint

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

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

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

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

Evaluation of the mining related geoenvironments stability

The paper deals with the stability of the Silver vein of the Mária deposit in Roòava in the connection with proposals of stoping meth-ods, having the aim to safeguard the rational mining out the deposit. The stoping methods proposed respected all the conclusions of the model geomechanical investigation. For various parts of the vein, the stoping methods considering not only mining-technical and mining-geological conditions, but also the advance of selective extraction of blocks were proposed