Description: Revising Commitments : Field Evidence on the Adjustment of Prior Choices

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...

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Bibliographic Details
Main Authors:	Giné, Xavier, Goldberg, Jessica, Silverman, Dan, Yang, Dean
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	AGGREGATE DEMAND AUTARCHY BANK OPERATIONS BANKING INSTITUTIONS BENCHMARK BUDGET CONSTRAINTS COMMITMENT DEVICES CONSUMERS CONSUMPTION SMOOTHING CORRELATIONS CROP INSURANCE DEMOGRAPHIC DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DIMINISHING MARGINAL UTILITY DISBURSEMENT DISBURSEMENTS DISCOUNT RATE DISCOUNT RATES DURABLES ECONOMIC MODELS ECONOMIC THEORY ECONOMICS RESEARCH EVALUATION STUDIES EXCHANGE RATE EXPENDITURE EXPENDITURES EXPERIMENTAL DESIGN EXPERIMENTAL STUDIES EXPERIMENTAL SUBJECTS EXPERIMENTS EXTREME POVERTY FIELD EXPERIMENTS FIELD WORK FINANCIAL MARKETS FINANCIAL PRODUCT FINANCIAL TRANSACTION HOUSEHOLD INCOME HOUSEHOLD WEALTH INCOME INCOME EFFECT INCOME LEVELS INTEREST RATE INTEREST RATES INTERNATIONAL BANK LOW-INCOME COUNTRIES MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MODELING NEGATIVE SHOCKS PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRIVATE SECTOR DEVELOPMENT RATE OF RETURN RATES OF RETURN REGRESSION ANALYSES REGRESSION ANALYSIS RESEARCH WORKING PAPERS RETURN SAVINGS SAVINGS ACCOUNT SHOCKS TO INCOME SHORT-TERM SAVING SIMULATION SIMULATIONS SMALL BUSINESSES SMOOTHING CONSUMPTION SOCIAL DEMANDS STOCKS SUBSTITUTION EFFECT TIME LAG TRADING TRANSACTION TRANSACTION COSTS UTILITY FUNCTION WAGES WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2012/06/16389929/revising-commitments-field-evidence-adjustment-prior-choices http://hdl.handle.net/10986/9309

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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.

Revising Commitments : Field Evidence on the Adjustment of Prior Choices

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