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Do Discount Rates Change over Time? Experimental Evidence from Ethiopia

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  • klemick, Heather
  • Yesuf, Mahmud

Abstract

This study tests the hyperbolic discounting hypothesis using real-payoff experiments in Ethiopia. We compared time preferences over cash and consumption goods and over different time horizons. We found that participants made consistent choices over time and that responses did not vary across payment type. However, participants offered an immediate payment option first selected the impatient reward more often than those offered a delayed payment initially. Participants with greater livestock wealth and smaller landholdings were more likely to select the patient reward.

Suggested Citation

  • klemick, Heather & Yesuf, Mahmud, 2008. "Do Discount Rates Change over Time? Experimental Evidence from Ethiopia," RFF Working Paper Series dp-08-06-efd, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-08-06-efd
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    File URL: http://www.rff.org/RFF/documents/EfD-DP-08-06.pdf
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    Cited by:

    1. Marieka M. Klawitter & C. Leigh Anderson & Mary Kay Gugerty, 2013. "Savings And Personal Discount Rates In A Matched Savings Program For Low-Income Families," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 468-485, July.
    2. Beyene, Abebe D. & Bezabih, Mintewab & Gebreegziabher, Zenebe, 2012. "Contract Duration under Incomplete Land Ownership Rights: Empirical Evidence from Rural Ethiopia," RFF Working Paper Series dp-12-09-efd, Resources for the Future.
    3. Ubfal, Diego, 2016. "How general are time preferences? Eliciting good-specific discount rates," Journal of Development Economics, Elsevier, vol. 118(C), pages 150-170.
    4. Anna Kaliciak & Radoslaw Kurach & Walid Merouani, 2016. "Who is Eager to Save for Retirement – the Cross-Country Evidence," LWS Working papers 23, LIS Cross-National Data Center in Luxembourg.

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    More about this item

    Keywords

    Field experiment; hyperbolic discounting; intertemporal choice;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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