The Impact of Education on the Subjective Discount Rate in Ugandan Villages

Michal Bauer and Julie Chytilová ()

No 4057, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Heterogeneity in time discounting may reinforce the existing barriers to save and invest faced by rural populations in developing countries. We elicit a subjective discount rate for a varied sample of Ugandan villagers. In accordance with other studies, we have found the discount rate to decrease with education. We examine this correlation further by testing the causal effect of education and exploit two different sources of its variation: school frequency across villages and the number of the respondents' school-going years that overlap with the era of the dictator Idi Amin's rule. For men, we find that education has a significant impact on their discount rate, similar in magnitude for both types of instruments and robust to observable characteristics. This finding highlights the importance of education in development.

Keywords: economic development; education; Uganda; patience; time discounting (search for similar items in EconPapers)
JEL-codes: C93 D91 O12 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2009-03
New Economics Papers: this item is included in nep-edu, nep-hrm and nep-lab
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Citations: View citations in EconPapers (5)

Published - published in: Economic Development and Cultural Change, 2010, 58 (4), 643–669

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Journal Article: The Impact of Education on Subjective Discount Rate in Ugandan Villages (2010)
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