The CEPR and Portal websites will be unavailable between 12:45GMT and 13:00GMT on Friday, 30th October 2020 due to maintenance.

DP13102 | Effects of Poverty on Impatience: Preferences or Inattention?

Publication Date

08/06/2018

JEL Code(s)

Keyword(s)

Programme Area(s)

Network(s)

Abstract

We study two psychological channels how poverty may increase impatient behavior – an effect on time preference and reduced attention. We measured discount rates among Ugandan farmers who made decisions about when to enjoy entertainment instead of working. We find that experimentally induced thoughts about poverty-related problems increase the preference to consume entertainment early and delay work. The effect is equivalent to a 27 p.p. increase in the intertemporal rate of substitution. Using monitoring tools similar to eye tracking, a novel feature for this subject pool, we show this effect is not due to a lower ability to sustain attention.