Work detail

Three Essays on Behaviour in Poverty

Author: PhDr. Julie Chytilová, Ph.D. (12.3.2009)
Year: 2009 - summer
Leaders: prof. RNDr. Jiří Hlaváček CSc.
Work type: Dissertations
Language: English
Pages: 73
Awards and prizes:
Abstract: The thesis consists of three papers about behavior in poverty. It aims to contribute to the ongoing debates about several puzzling phenomena which are at heart of the persistent nature of poverty such as intra-household decision-making about scarce resources, fertility preferences and demographic transition; and the role of education in formation of individual time discounting. In particular, it may shed some light on questions such as: Why do mostly women participate in microfinance schemes? What are the motivations behind the preference for a high number of children in some countries? Why do not households save even if their earnings are above subsistence level?
Many empirical observations in developing countries indicate that women tend to spend income in different ways than men and that they often make choices more conducive to development. For example, it has been reported that income in the hands of women leads to higher child survival probability and increases educational expenditures. The experience of microfinance institutions gives women an equally favorable record. This evidence has shaped much of the development aid policy. However, it remains unclear what drives these behavioral differences. There may be various types of preferences in which men and women could differ such as patience, risk aversion, self-control difficulties (being more impatient now than in the future) or altruism. The first paper „Do Children Make Women More Patient? Experimental Evidence from India” contributes to this discussion by studying gender heterogeneity in the first three types of preferences. Experimental methods were used to elicit the subjective discount rate and attitude to risk in Indian villages. The results show that there is no gender difference in attitude to risk and self-control difficulties. On the other hand, women made more patient choices than men (were more likely than men to prefer lower amount of money earlier in time than higher amount of money with a delay of three months) and interestingly their discount rate is related to the number of children they have. There is no gender difference for individuals without children. Women’s discount rate declines up to four children, whereas men’s discount rate does not. This finding suggests that conflictual interactions within a household are more likely when a couple has young children.
A rapid population growth reinforces high poverty levels in Sub-Saharan Africa. While average fertility has declined substantially in the last fifty years in the least developed countries, the demographic transition is still far from complete in sub-Saharan Africa. There is a large body of evidence that establishes a strong negative correlation between education and fertility. The second paper “Education and Desired Fertility in Ugandan Villages” studies this relationship and motivations that affect desired number of children on a sample of 856 villagers from southern Uganda. We collected data on the desired number of children, observable characteristics and self-reported motives for a high desired fertility. Individuals with more schooling want to have fewer children: individuals who completed four classes or less want to have 8.9 children whereas those with at least ten classes want to have only 4.6. A higher importance of factors such as economic contributions from children, fear of diseases and clan linkage emerged closely associated with a higher desired fertility and a lower education level. We examine the correlation between education and fertility further and use the number of schools in different villages as an instrumental variable for education. There is a significant effect of education for women; for men the result holds with greater uncertainty. All these findings suggest that education stimulates a complex change in fertility preferences and underline its importance as a tool for reducing the rapid population growth.
In both Ugandan and Indian datasets, we find that more educated people make more patient choices. The third paper “A Model of Human Capital, Time Preference and Economic Growth” builds on this evidence and introduces endogenous subjective discount rate into a two-period human-capital-driven growth model. In the model, subjective discount rate depends on the level of human capital. Low human capital societies do not grow fast since high discount rate discourages schooling as the major form of savings. This implication is further reinforced by modeling the efficiency of schooling in the context of population pressure which is also driven by low human capital. The model may produce multiple equilibrium development paths and it illustrates wider role of education in tackling possible development traps.
Downloadable: Dissertation of J. Chytilová
June 2023


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