Poverty and Time Preference

Leandro Carvalho

No WR-759, Working Papers from RAND Corporation

Abstract: This paper estimates the time preference of poor households in rural Mexico. It uses data from a program that randomly assigned communities to treatment and control and paid transfers to poor households in treatment communities. The randomization implies that differences in consumption between control and treatment households are due to the program. A buffer-stock model predicts how the response of consumption to transfers depends on the discount factor. It estimates this parameter by matching simulated to sample treatment effects on consumption. The estimates being very low, it concludes that poor households are very impatient or a richer model is needed.

Keywords: simulation; consumption; time preference; randomized experiment; poverty (search for similar items in EconPapers)
JEL-codes: D91 O12 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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