How Important Is Temptation Spending? Maybe Less than We Thought
Temptation plays a key role in theoretical work on spending and saving in developing countries. The limited empirical evidence on its importance, however, suggests that cash transfers do not induce increases in temptation spending. This paper expands the evidence base by studying the effect of randomized exposure to temptation on spending decisions in rural Malawi. Consistent with the cash transfer literature, a more tempting environment does not induce significant changes in temptation spending. However, the magnitudes of both temptation spending levels and the treatment effects are somewhat sensitive to the definition of temptation spending used. This paper examines the potential factors that may be driving these 0 results, and suggests that future research may find a limited role for temptation in the economic decisions of the poor.
Main Authors: | , , |
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Format: | Journal Article biblioteca |
Language: | English en_US |
Published: |
Published by Oxford University Press on behalf of the World Bank
2022-01-08
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Subjects: | TEMPTATION SPENDING, SELF-CONTROL, BEHAVIORAL ECONOMICS, DEVELOPMENT ECONOMICS, |
Online Access: | http://documents.worldbank.org/curated/en/099946012082333002/IDU06c40656c0c3cb04f9d0ab0b00e64fca4f398 https://openknowledge.worldbank.org/handle/10986/40912 |
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Summary: | Temptation plays a key role in
theoretical work on spending and saving in developing
countries. The limited empirical evidence on its importance,
however, suggests that cash transfers do not induce
increases in temptation spending. This paper expands the
evidence base by studying the effect of randomized exposure
to temptation on spending decisions in rural Malawi.
Consistent with the cash transfer literature, a more
tempting environment does not induce significant changes in
temptation spending. However, the magnitudes of both
temptation spending levels and the treatment effects are
somewhat sensitive to the definition of temptation spending
used. This paper examines the potential factors that may be
driving these 0 results, and suggests that future research
may find a limited role for temptation in the economic
decisions of the poor. |
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