Time preferences and commitment devices: evidence from ROSCAs and funeral groups in Benin

Jacopo Bonan, Philippe LeMay-Boucher, Kyle McNabb and Charlemagne Codjo Tomavo

Oxford Development Studies, 2019, vol. 47, issue 3, 356-372

Abstract: Drawing on first-hand data collected from a household survey in urban Benin, we examine membership in two types of informal groups that display the characteristics of a commitment device: Rotating Savings and Credit Associations (ROSCAs) and funeral groups. We investigate whether agents displaying time preferences with a present bias are more likely to commit themselves through participation in such groups. Our results provide evidence indicating that women who display such preferences are more likely to join funeral groups, but not ROSCAs, and to save more through them. These results hold for women but not for men. We also ensure that our results cannot be explained by intra-household conflict issues.

Date: 2019
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DOI: 10.1080/13600818.2019.1588958

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