Work

Poverty, Seasonal Scarcity and Exchange Asymmetries

Year: 2019

Type: report

Abstract: A growing literature associates poverty with biases in decision-making. We investigate this link in a sample of over 3, 000 small-scale farmers in Zambia, who participated in a series of experiments involving the opportunity to exchange randomly assigned household items for alternative items of similar value. Analyzing a total of 5, 842 trading decisions over a range of household items, we show that exchange asymmetries are sizable and remarkably robust across items and experimental procedures. Using cross sectional, seasonal and randomized variation in financial resource availability, we show that exchange asymmetries decrease in magnitude when subjects are more constrained. Consistent with the interpretation that financial constraints increase decision stakes, we also show that trading probabilities increase when the value of the items involved is exogenously increased.

Source: National Bureau of Economic Research

DOI: 10.3386/w26357

Authors: Dietmar Fehr, Günther Fink, Kelsey Jack

Institutions: National Bureau of Economic Research, University of California, Santa Barbara, Swiss Tropical and Public Health Institute, University of Basel, Heidelberg University

Language: English

Topic: Income, Poverty, and Inequality

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: No poverty, Reduced inequalities, Zero hunger

Open Access status: green

Funders: International Growth Centre, Deutsche Forschungsgemeinschaft