Poverty, Seasonal Scarcity and Exchange Asymmetries

63 Pages Posted: 7 Oct 2019 Last revised: 9 Jul 2022

See all articles by Dietmar Fehr

Dietmar Fehr

Heidelberg University - Alfred Weber Institute for Economics

Gunther Fink

University of Basel - Swiss Tropical and Public Health Institute

Kelsey Jack

University of California, Santa Barbara (UCSB)

Date Written: October 2019

Abstract

A growing literature associates poverty with biases in decision-making. We investigate this link in a sample of over 3,000 small-scale farmers in Zambia, who participated in a series of experiments involving the opportunity to exchange randomly assigned household items for alternative items of similar value. Analyzing a total of 5,842 trading decisions over a range of household items, we show that exchange asymmetries are sizable and remarkably robust across items and experimental procedures. Using cross sectional, seasonal and randomized variation in financial resource availability, we show that exchange asymmetries decrease in magnitude when subjects are more constrained. Consistent with the interpretation that financial constraints increase decision stakes, we also show that trading probabilities increase when the value of the items involved is exogenously increased.

Suggested Citation

Fehr, Dietmar and Fink, Gunther and Jack, Kelsey, Poverty, Seasonal Scarcity and Exchange Asymmetries (October 2019). NBER Working Paper No. w26357, Available at SSRN: https://ssrn.com/abstract=3465375

Dietmar Fehr (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Gunther Fink

University of Basel - Swiss Tropical and Public Health Institute ( email )

Basel
Switzerland

Kelsey Jack

University of California, Santa Barbara (UCSB) ( email )

South Hall 5504
Santa Barbara, CA 93106
United States

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