Subjective discount rates among Israeli Arabs and Israeli Jews

Ahmad Mahajna, Uri Benzion, Ravid Bogaire and Tal Shavit ()

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2008, vol. 37, issue 6, 2513-2522

Abstract: In this study, we compare the subjective discount rate for Israeli Jews and Arabs. All the subjects were bank customers, who were asked to bid and ask prices for delayed fixed amounts and for lotteries. The two populations live in the same country under the same laws. Nevertheless, according to the literature, Israeli Arabs seem to be a discriminated minority, who exhibit traits of a traditional collectivist culture, while Israeli Jews are a majority, who exhibit traits of an individualistic culture. As a discriminated minority, Israeli Arab may suffer from lower trust and as a result, according to the "trust" hypothesis, exhibit higher subjective discount rates and higher risk aversion. On the other hand, according to the "cushion" hypothesis, a collectivist society such as Israeli Arabs, provides a safety net for the individual and as a result, he will exhibit lower subjective discount rates and lower risk-aversion. The experimental findings show that the subjective discount rate and risk aversion of Israeli Arabs are significantly higher than that of Israeli Jews. Moreover, higher percent of Israeli Jews are at the low range of the discount rates (below 10%) and lower percent of Israeli Jews are at the high range of discount rate (above 20%) compared to Israeli Arabs. This is consistent with the "trust" hypothesis. For Israeli Jews, the discount rates are closer to the bank interest rate, while Israeli Arabs rates are much higher particularly for receipt. The dispersion of the distribution of discount rate is much larger for Arabs than for Jews.

Keywords: Discounting; Risk; aversion; Cross-cultural; Israeli; Arabs; Israeli; Jews (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6W5H ... 6be9ec0f78f9b71c9404
Full text for ScienceDirect subscribers only

Related works:
Working Paper: SUBJECTIVE DISCOUNT RATES AMONG ISRAELI ARABS AND ISRAELI JEWS (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:37:y:2008:i:6:p:2513-2522

Access Statistics for this article

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics) is currently edited by Pablo Brañas Garza

More articles in Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics) from Elsevier
Bibliographic data for series maintained by Catherine Liu ().