Psychological Effects of Poverty on Time Preferences

112 Pages Posted: 7 Aug 2021

See all articles by Vojtech Bartos

Vojtech Bartos

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Michal Bauer

Charles University in Prague - Institute of Economic Studies; CERGE-EI

Julie Chytilová

Charles University in Prague - Department of Economics

Ian Levely

Wageningen University

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.

JEL Classification: C93, D91, O12

Suggested Citation

Bartos, Vojtech and Bauer, Michal and Chytilová, Julie and Levely, Ian, Psychological Effects of Poverty on Time Preferences. IZA Discussion Paper No. 14607, Available at SSRN: https://ssrn.com/abstract=3900869 or http://dx.doi.org/10.2139/ssrn.3900869

Vojtech Bartos (Contact Author)

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

Michal Bauer

Charles University in Prague - Institute of Economic Studies ( email )

Opletalova 26
Prague 1, 110 00
Czech Republic
+420 222 112 317 (Phone)
+420 222 112 304 (Fax)

HOME PAGE: http://ies.fsv.cuni.cz/index.php?module=kernel&action=user&id_user=183&lng=en_GB

CERGE-EI ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic

Julie Chytilová

Charles University in Prague - Department of Economics ( email )

Opletalova 26
Prague 1, 163 00
Czech Republic

HOME PAGE: http://ies.fsv.cuni.cz/index.php?module=kernel&action=user&id_user=130&lng=cs_CZ

Ian Levely

Wageningen University ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

HOME PAGE: http://www.IanLevely.com

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