Psychological Effects of Poverty on Time Preferences

Abstract We test whether an environment of poverty affects time preferences through purely psychological channels. We measured discount rates among farmers in Uganda who made decisions about when to enjoy entertainment instead of working. To circumvent the role of economic constraints, we experiment...

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Bibliographic Details
Published inThe Economic journal (London) Vol. 131; no. 638; pp. 2357 - 2382
Main Authors Bartoš, Vojtěch, Bauer, Michal, Chytilová, Julie, Levely, Ian
Format Journal Article
LanguageEnglish
Published Oxford University Press 01.08.2021
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ISSN0013-0133
1468-0297
DOI10.1093/ej/ueab007

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Summary:Abstract We test whether an environment of poverty affects time preferences through purely psychological channels. We measured discount rates among farmers in Uganda who made decisions about when to enjoy entertainment instead of working. To circumvent the role of economic constraints, we experimentally induced thoughts about poverty-related problems, using priming techniques. We find that thinking about poverty increases the preference to consume entertainment early and to delay work. Using monitoring tools similar to eye tracking, a novel feature for this subject pool, we show that this effect is unlikely to be driven by less careful decision-making processes.
ISSN:0013-0133
1468-0297
DOI:10.1093/ej/ueab007