Revising Commitments : Field Evidence on the Adjustment of Prior Choices
The very poor in developing countries often make intertemporal choices that seem at odds with their individual self-interest. There are many possible reasons why. This paper investigates several of these reasons with a lab-in-the-field experiment i...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/06/16389929/revising-commitments-field-evidence-adjustment-prior-choices http://hdl.handle.net/10986/9309 |
| Summary: | The very poor in developing countries
often make intertemporal choices that seem at odds with
their individual self-interest. There are many possible
reasons why. This paper investigates several of these
reasons with a lab-in-the-field experiment in rural Malawi
involving large stakes. It makes two contributions. First,
it constructs a new dependent variable: revisions of prior
choices regarding the allocation of future income. This
allows us to directly examine intertemporal choice revision
and its determinants. In particular, this dependent variable
permits a novel test for the existence of self-control
problems. It turns out revisions of money allocations toward
the present are positively associated with measures of
present-bias from an earlier baseline survey, as well as the
(randomly assigned) closeness in time to the first possible
date of money disbursement. Second, the paper investigates
other potential determinants of revision, aside from
self-control problems. It finds little evidence that
revisions of money allocations toward the present are
associated with spousal preferences for such revision,
household shocks or the financial sophistication of respondents. |
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