The impact of a large-scale poverty-targeted cash transfer program on intertemporal choice

Abstract

We use a social experiment to test whether the government of Zambia’s cash transfer program affects intertemporal choice. A cash transfer program may also alter expectations about future quality of life and make one happier, two conditions that can affect intertemporal decision-making and the desire to invest in the future. We find that the program affects time discounting and that psychological states are also strongly associated with time discounting, but psychological states do not mediate the effect of the cash transfer on time discounting.