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Effects of Poverty on Impatience: Preferences or Inattention?

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  • Chytilová, Julie
  • BartoÅ¡, VojtÄ›ch
  • Bauer, Michal
  • Levely, Ian

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.

Suggested Citation

  • Chytilová, Julie & BartoÅ¡, VojtÄ›ch & Bauer, Michal & Levely, Ian, 2018. "Effects of Poverty on Impatience: Preferences or Inattention?," CEPR Discussion Papers 13102, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13102
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    Cited by:

    1. Christina Kaliampakou & Lefkothea Papada & Dimitris Damigos, 2021. "Are Energy-Vulnerable Households More Prone to Informative, Market, and Behavioral Biases?," Societies, MDPI, vol. 11(4), pages 1-22, October.
    2. Banerjee, Abhijit & Sequeira, Sandra, 2023. "Learning by searching: Spatial mismatches and imperfect information in Southern labor markets," Journal of Development Economics, Elsevier, vol. 164(C).
    3. de Almeida, Filipa & Scott, Ian J. & Soro, Jerônimo C. & Fernandes, Daniel & Amaral, André R. & Catarino, Mafalda L. & Arêde, André & Ferreira, Mário B., 2024. "Financial scarcity and cognitive performance: A meta-analysis," Journal of Economic Psychology, Elsevier, vol. 101(C).
    4. Ernst-Jan Bruijn & Gerrit Antonides, 2022. "Poverty and economic decision making: a review of scarcity theory," Theory and Decision, Springer, vol. 92(1), pages 5-37, February.
    5. Supreet Kaur & Sendhil Mullainathan & Suanna Oh & Frank Schilbach, 2021. "Do Financial Concerns Make Workers Less Productive?," NBER Working Papers 28338, National Bureau of Economic Research, Inc.
    6. Maulik Jagnani & Claire Duquennois, 2023. "Financial concerns and sleeplessness," French Stata Users' Group Meetings 2023 09, Stata Users Group.
    7. Sequeira, Sandra & Banerjee, Abhijit, 2020. "Spatial Mismatches and Imperfect Information in the Job Search," CEPR Discussion Papers 14414, C.E.P.R. Discussion Papers.
    8. Banker, Sachin & Bhanot, Syon P. & Deshpande, Aishwarya, 2020. "Poverty identity and preference for challenge: Evidence from the U.S. and India," Journal of Economic Psychology, Elsevier, vol. 76(C).
    9. Schmitt, Stefanie Y. & Schlatterer, Markus G., 2021. "Poverty and limited attention," Economics & Human Biology, Elsevier, vol. 41(C).

    More about this item

    Keywords

    Poverty; Scarcity; Time discounting; Preferences; Inattention; Decision-making process;
    All these keywords.

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