Poverty, Salience and Inter-temporal Decisions

Study Context

Several studies have documented a link between poverty and impatient behaviors, including causal studies that show that low-income conditions lead to higher levels of discounting. However, there is no consensus on the mechanism(s) linking poverty to greater discounting of the future. The literature frequently implies that by making pressing needs more salient, scarcity induces impatient choices. However, no paper has rigorously tested this hypothesis. This study uses an experimental study to isolate and test the salience mechanism.

Study Design

This randomized experimental study will be comprised of college students. The key task measuring discount rate will require them to allocate a 60-minute task across two points in time. The study team focuses on time rather than money to avoid issues of credit constraints, and because for students, time is a crucial if not the main resource that they control and invest in their future. After they have considered all of the events and tasks for those future weeks, we will deepen the salience of future time constraints by asking how they would budget time for an important 2-hour task in that period. The systematic variation of workload during a semester will allow for real and exogenous variation in time burdens for students.

Results and Policy Lessons

Results forthcoming.