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Credit Constraints and the Measurement of Time Preferences

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  • Mark Dean

    (Columbia University)

  • Anja Sautmann

    (World Bank)

Abstract

Incentivized experiments are often used to identify the time preferences of households in developing countries. We argue theoretically and empirically that experimental measures may not identify preference parameters, but are a useful tool for understanding financial shocks and constraints. Using data from an experiment in Mali, we find that subject responses vary with savings and financial shocks, meaning they provide information about credit constraints and can be used to test models of risk sharing.

Suggested Citation

  • Mark Dean & Anja Sautmann, 2021. "Credit Constraints and the Measurement of Time Preferences," The Review of Economics and Statistics, MIT Press, vol. 103(1), pages 119-135, March.
    • Handle: RePEc:tpr:restat:v:103:y:2021:i:1:p:119-135
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