Working Paper: CEPR ID: DP13102
Authors: Vojtch Barto; Michal Bauer; Julie Chytilova; Ian Levely
Abstract: We study two psychological channels how poverty may increase impatient behavior – an effect on time preference and reduced attention. We measured discount rates among Ugandan farmers who made decisions about when to enjoy entertainment instead of working. We find that experimentally induced thoughts about poverty-related problems increase the preference to consume entertainment early and delay work. The effect is equivalent to a 27 p.p. increase in the intertemporal rate of substitution. Using monitoring tools similar to eye tracking, a novel feature for this subject pool, we show this effect is not due to a lower ability to sustain attention.
Keywords: poverty; scarcity; time discounting; preferences; inattention; decision-making process
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Poverty-related cognitive load (I32) | Increased impatience (E41) |
| Poverty (I32) | Attention levels remain consistent (I21) |
| Increased consumption of calories (E21) | Preferences for early entertainment consumption (L82) |
| Thinking about poverty (I32) | Increased preferences for consuming entertainment earlier (D11) |
| Thinking about poverty (I32) | Delaying work (J22) |