Thesis Defense Summary

Name:	Yuki Tanaka
Degree Title:	Ph.D. in Development Economics
Date of Conferment:	September 7, 2011
Title of Dissertation:	Regional Variation in Risk and Time Preferences and Impact of the Preferences on Educational Investment: Experimental Evidence from Rural Uganda
Chief Examiner:	山野峰
Committee:	大山達雄 山内慎子 Alistair Munro 島村靖治（立命館大学） 川口大司（一橋大学）

I.
Ms. Tanaka’s dissertation realizes that the schooling decision is essentially an investment decision, in that it involves a large amount of outlay of time and money by both the parents and the children today for uncertain benefits accrued by the children in the future, and highlights the possibility that investment related preferences, namely risk and time preferences, could play a role in such a decision. Her study is the first study to conduct a large-scale experiment eliciting both the risk and time preferences of rural households in a developing country. This large dataset, together with the survey data of the children in the same households enabled the analysis on the potential impact of the parental preferences on the educational investment. In her study, she aims to bridge the gap in the literature first by investigating the determinants of the risk aversion and the patience of the rural Ugandans using individual, household and regional variables, and then by estimating the effects of the preferences on the investment decision for children’s education.

 

The data used in her study are collected as part of the Research on Poverty, Environment and Agricultural Technology (RePEAT) Project in rural Uganda. The project team conducted three rounds of paneled household surveys in 94 villages in 2003, 2005 and 2009. The incentivized field experiment eliciting the preferences of the same households took place in 2009. The total number of respondents in the experiment is 1287. The villages were first stratified according to agricultural zones in the country and then randomly selected. The northern region was excluded from the surveys due to security concerns, yet the samples are representative of the areas covered. 

 

Chapter 2 reviews the theories and empirical evidence on the determinants and the measurement of risk and time preferences and how the preferences relate to human capital investment.

 

Chapter 3 explains the experimental design and estimation methodology that were used to estimate the risk and time preferences of the farmers, and identifies the regional and other characteristics that affect their risk aversion and patience. The first goal is then to estimate the risk and time preferences and the determinants of the preferences using the experimental data. The interval regression method was applied to estimate each of the parameters and the covariates. The main finding from Chapter 3 is that both the risk and time preferences correlate with regional characteristics such as agro-climatic conditions and infrastructure. Especially, the risk aversion and the impatience are stronger in the agro-climatically less favorable regions.

 

Chapter 4 investigates the relationship between the risk and time preferences of the household heads and the educational investment for the adolescents in the household. The second goal is to estimate the relationship between the preferences of the household heads and the schooling status of the children in the household. We estimate several educational outcome variables by applying the ordinary least squares method or categorical response model accordingly. In this chapter, she reports that while risk aversion increases the school attendance and the educational expenditure, impatience delays school enrollment resulting in slow progression through schooling. The first policy implication is that the regional characteristics may influence the investment decision behavior of rural households through their effect on risk and time preferences. Second, while the moderately risk averse parents may consider education as risk-coping mechanism, opportunity cost of time at school is hindering timely educational investment.

 

She discusses policy implications from her study in Section 5.