Does Education Matter in Patience Formation? Evidence from Ugandan Villages

25 Pages Posted: 23 Apr 2007

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

Date Written: 2007

Abstract

The paper aims to contribute to the understanding of why there is a lack of domestic saving and investment in rural parts of sub-Saharan Africa. It focuses on heterogeneity in inter-temporal preferences as a possible explanation of this important puzzle. The study is based on a unique experimental data set collected from 856 respondents in Ugandan villages and scrutinizes how individual patience - measured by the discount rate - is formed.

The results suggest that Ugandan respondents are substantially less patient than their counterparts in similar experimental studies undertaken in developed countries and South Asia. We find a strong negative association between the level of education and the individual discount rate. Furthermore, we took advantage of the Ugandan education reform in 1996 and varying school frequency to demonstrate the causal relationship stemming from education to patience. The estimates suggest that an additional year at school decreases the discount rate on average by 35 percentage points after controlling for other characteristics (age, income group, sex, marital status and clan linkage).

Our findings strongly accord with patience understood as a non-cognitive ability which needs to be taught by parents, learnt at school and promoted by social norms. The Ugandan responses, therefore, propose a new way in which education may influence development in sub-Saharan Africa - by shaping individual patience.

Keywords: Time preference, patience, discount rate, education, savings, economic development, field survey, sub-Saharan Africa

JEL Classification: C93, D91, O12

Suggested Citation

Bauer, Michal and Chytilová, Julie, Does Education Matter in Patience Formation? Evidence from Ugandan Villages (2007). Available at SSRN: https://ssrn.com/abstract=981330 or http://dx.doi.org/10.2139/ssrn.981330

Michal Bauer (Contact Author)

Charles University in Prague - Institute of Economic Studies ( 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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