The effects of savings on risk-taking and intertemporal choice behavior

Available from: 
October 2013
Paper author(s): 
Leandro Carvalho (University of Southern California)
Silvia Prina (Case Western Reserve University)
Justin Sydnor (University of Wisconsin)
Financial Economics

We investigate whether saving affects risk-taking and intertemporal choices. A field experiment in Nepal randomized access to savings accounts among a largely unbanked population, generating random variation in savings behavior. A year later we administered lottery-choice and intertemporal-choice tasks. The treatment shows less risk aversion. The evidence on intertemporal choice is less conclusive, but points to more patience for the treated. Combining the randomized variation with a structural model, we quantify differences in annual discount rates and the intertemporal elasticity of substitution. We provide suggestive evidence that the results are driven by preference changes rather than wealth effects.


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Research section: 
Lacea 2013 annual meeting
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