1. Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday
- Author
-
Stephanie W. Wang, Leandro S. Carvalho, and Stephan Meier
- Subjects
Finance ,Economics and Econometrics ,Poverty ,business.industry ,Heuristic ,media_common.quotation_subject ,05 social sciences ,Cognition ,Variation (game tree) ,Intertemporal choice ,Article ,Microeconomics ,Survey methodology ,Cash ,0502 economics and business ,Economics ,Quality (business) ,050207 economics ,business ,050205 econometrics ,media_common - Abstract
We study the effect of financial resources on decision-making. Low-income US households are randomly assigned to receive an online survey before or after payday. The survey collects measures of cognitive function and administers risk and intertemporal choice tasks. The study design generates variation in cash, checking and savings balances, and expenditures. Before-payday participants behave as if they are more present-biased when making intertemporal choices about monetary rewards but not when making intertemporal choices about nonmonetary real-effort tasks. Nor do we find before-after differences in risk-taking, the quality of decision-making, the performance in cognitive function tasks, or in heuristic judgments. (JEL C83, D14, D81, D91, I32)
- Published
- 2016