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Myopic preferences or subsistence income? Why do rickshaw cyclists rent the cycle?

Author

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  • Magnus Hatlebakk

Abstract

One year rent is sufficient to buy a rickshaw in the plains of Nepal, while a rickshaw will last many years, so purchase appears very profitable. Still most cyclists rent the rickshaw. Based on choices made by rickshaw pullers between hypothetical financing schemes for rickshaws we investigate whether the explanation is a high time-preference rate or a high elasticity of the marginal utility of consumption, which in turn can be explained by preferences that are formed by consumption near a subsistence level. We find that subsistence constraints are more important than myopic preferences.

Suggested Citation

  • Magnus Hatlebakk, 2012. "Myopic preferences or subsistence income? Why do rickshaw cyclists rent the cycle?," CMI Working Papers 1, CMI (Chr. Michelsen Institute), Bergen, Norway.
    • Handle: RePEc:chm:wpaper:wp2012-1
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Are rickshaw pullers myopic?
      by Economic Logician in Economic Logic on 2012-04-17 19:54:00

    Citations

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    Cited by:

    1. Espen Villanger, 2015. "Entrepreneurial Abilities and Barriers to Microenterprise Growth: A Case Study in Nepal," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 24(2), pages 115-147, September.
    2. Soldatos, Gerasimos T., 2015. "Law, Coercion, And Socioeconomic Equilibrium," MPRA Paper 68953, University Library of Munich, Germany.
    3. Gerasimos T. SOLDATOS, 2015. "Law, Coercion And Socioeconomic Equilibrium," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 16, pages 39-50, December.
    4. Magnus Hatlebakk, 2014. "Poverty Dynamics in Rural Orissa: Transitions in Assets and Occupations over Generations," Journal of Development Studies, Taylor & Francis Journals, vol. 50(6), pages 877-893, June.

    More about this item

    Keywords

    Investment behavior; Poverty; Time-preferences;
    All these keywords.

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