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

40 Pages Posted: 30 Mar 2009

See all articles by Michal Bauer

Michal Bauer

Charles University in Prague - Institute of Economic Studies; CERGE-EI

Julie Chytilová

Charles University in Prague - Department of Economics

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: time discounting, patience, education, economic development, Uganda

JEL Classification: C93, D91, O12

Suggested Citation

Bauer, Michal and Chytilová, Julie, The Impact of Education on the Subjective Discount Rate in Ugandan Villages. IZA Discussion Paper No. 4057, Available at SSRN: https://ssrn.com/abstract=1369803

Michal Bauer (Contact Author)

Charles University in Prague - Institute of Economic Studies ( email )

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HOME PAGE: http://ies.fsv.cuni.cz/index.php?module=kernel&action=user&id_user=183&lng=en_GB

CERGE-EI ( email )

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Julie Chytilová

Charles University in Prague - Department of Economics ( email )

Opletalova 26
Prague 1, 163 00
Czech Republic

HOME PAGE: http://ies.fsv.cuni.cz/index.php?module=kernel&action=user&id_user=130&lng=cs_CZ

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