Journal article

Discount Rates of Children and High School Graduation

M Castillo, JL Jordan, R Petrie

Economic Journal | Oxford University Press (OUP) | Published : 2019

Abstract

We present direct evidence that children who are unwilling to wait for a larger reward and instead prefer a small one earlier (i.e. they have a higher discount rate) are less likely to graduate from high school. Using an incentivised experiment to measure the discount rates of 878 children, we find large effects on human capital accumulation - a one standard deviation increase in the discount rate decreases the probability of graduating from high school by four percentage points. Importantly, the impact of a child's discount rate is distinct from behavioural problems (e.g. disciplinary referrals), academic achievement, risk attitudes, demographics and household environment. Consistent with t..

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