Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment
Motivated by evidence of mental accounting, this paper tests whether the choice of when to be paid depends on the income type. A lab-in-the-field experiment in Kenya asked dairy cooperative members to allocate both their regular milk payments and an irregular windfall between two dates. We find that...
| Autores principales: | , |
|---|---|
| Formato: | Artículo preliminar |
| Lenguaje: | Inglés |
| Publicado: |
International Food Policy Research Institute
2017
|
| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/147901 |
| _version_ | 1855531920478175232 |
|---|---|
| author | Kramer, Berber Kunst, David |
| author_browse | Kramer, Berber Kunst, David |
| author_facet | Kramer, Berber Kunst, David |
| author_sort | Kramer, Berber |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Motivated by evidence of mental accounting, this paper tests whether the choice of when to be paid depends on the income type. A lab-in-the-field experiment in Kenya asked dairy cooperative members to allocate both their regular milk payments and an irregular windfall between two dates. We find that participants allocated milk payments to the later of the two dates but allocated the windfall to the earlier date. Most participants self-reported deferring their milk payments in order to save for lump-sum expenses. Those planning to use milk payments for smaller, more frequent purchases were less likely to defer payments. Farmers hence appeared to earmark regular milk payments, but not the irregular windfall, for bulky expenditures. This behavior potentially explains why discount rates elicited using experimenter money are often higher than those inferred from observed choices over regular income. Given that compliance with informal contracts depends on whether the timing of payments aligns with recipient preferences, these findings also have implications for contract design in rural value chains. |
| format | Artículo preliminar |
| id | CGSpace147901 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2017 |
| publishDateRange | 2017 |
| publishDateSort | 2017 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1479012025-11-06T06:54:59Z Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment Kramer, Berber Kunst, David income microeconomics marketing markets dairying Motivated by evidence of mental accounting, this paper tests whether the choice of when to be paid depends on the income type. A lab-in-the-field experiment in Kenya asked dairy cooperative members to allocate both their regular milk payments and an irregular windfall between two dates. We find that participants allocated milk payments to the later of the two dates but allocated the windfall to the earlier date. Most participants self-reported deferring their milk payments in order to save for lump-sum expenses. Those planning to use milk payments for smaller, more frequent purchases were less likely to defer payments. Farmers hence appeared to earmark regular milk payments, but not the irregular windfall, for bulky expenditures. This behavior potentially explains why discount rates elicited using experimenter money are often higher than those inferred from observed choices over regular income. Given that compliance with informal contracts depends on whether the timing of payments aligns with recipient preferences, these findings also have implications for contract design in rural value chains. 2017 2024-06-21T09:23:28Z 2024-06-21T09:23:28Z Working Paper https://hdl.handle.net/10568/147901 en https://hdl.handle.net/10568/147965 https://hdl.handle.net/10568/150570 https://hdl.handle.net/10568/148066 application/pdf International Food Policy Research Institute Kramer, Berber and Kunst, David. Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment. IFPRI Discussion Paper 1646. Washington, DC https://hdl.handle.net/10568/147901 |
| spellingShingle | income microeconomics marketing markets dairying Kramer, Berber Kunst, David Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment |
| title | Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment |
| title_full | Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment |
| title_fullStr | Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment |
| title_full_unstemmed | Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment |
| title_short | Intertemporal choice and income regularity: Non-fungibility in a lab-in-the-field experiment |
| title_sort | intertemporal choice and income regularity non fungibility in a lab in the field experiment |
| topic | income microeconomics marketing markets dairying |
| url | https://hdl.handle.net/10568/147901 |
| work_keys_str_mv | AT kramerberber intertemporalchoiceandincomeregularitynonfungibilityinalabinthefieldexperiment AT kunstdavid intertemporalchoiceandincomeregularitynonfungibilityinalabinthefieldexperiment |