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Time Discounting and Credit Market Access in a Large-Scale Cash Transfer Programme

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  • Sudhanshu Handa
  • Bruno Martorano
  • Carolyn T. Halpern
  • Audrey Pettifor
  • Harsha Thirumurthy

Abstract

Time discounting is thought to influence decision-making in almost every sphere of life, including personal finances, diet, exercise and sexual behaviour. In this article, we provide evidence on whether a national poverty alleviation programme in Kenya can affect inter-temporal decisions. We administered a preferences module as part of a large-scale impact evaluation of the Kenyan Government's Cash Transfer for Orphans and Vulnerable Children. Four years into the programme, we find that individuals in the treatment group are only marginally more likely to wait for future money, due in part to the erosion of the value of the transfer by inflation. However, among the poorest households for whom the value of transfer is still relatively large we find significant programme effects on the propensity to wait. We also find strong programme effects among those who have access to credit markets though the programme itself does not improve access to credit.

Suggested Citation

  • Sudhanshu Handa & Bruno Martorano & Carolyn T. Halpern & Audrey Pettifor & Harsha Thirumurthy, 2016. "Time Discounting and Credit Market Access in a Large-Scale Cash Transfer Programme," Journal of African Economies, Centre for the Study of African Economies, vol. 25(3), pages 367-387.
    • Handle: RePEc:oup:jafrec:v:25:y:2016:i:3:p:367-387.
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    File URL: http://hdl.handle.net/10.1093/jae/ejv031
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    Cited by:

    1. Hamidou Jawara & Rainer Thiele, 2021. "The Nutrient-Income Elasticity in Ultra-Poor Households: Evidence from Kenya," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(6), pages 1795-1819, December.
    2. Jean A. Junior & Arlene M. Katz & Roy Ahn, 2016. "The Perspectives of Young Women in Rural Western Kenya on Unconditional Cash Transfers," Poverty & Public Policy, John Wiley & Sons, vol. 8(1), pages 72-94, March.

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