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Time Discounting and Credit Market Access in a Large-Scale Cash Transfer Programme


Time discounting is thought to influence decision-making in almost every sphere of life, including personal finances, diet, exercise and sexual behaviour. In this article, we provide evidence on whether a national poverty alleviation programme in Kenya can affect inter-temporal decisions. We administered a preferences module as part of a large-scale impact evaluation of the Kenyan Government's Cash Transfer for Orphans and Vulnerable Children. Four years into the programme, we find that individuals in the treatment group are only marginally more likely to wait for future money, due in part to the erosion of the value of the transfer by inflation. However, among the poorest households for whom the value of transfer is still relatively large we find significant programme effects on the propensity to wait. We also find strong programme effects among those who have access to credit markets though the programme itself does not improve access to credit.


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Publication date: 2016

Author(s): Sudhanshu Handa, Bruno Martorano, Carolyn T. Halpern, Audrey Pettifor, Harsha Thirumurthy

Journal: Journal of African Economies

Volume: 25

No.: 3

Page(S): 367-387

Language: English

Peer reviewed: YES

Related Innocenti Project(s):

Social protection and cash transfers