University of Cambridge > Talks.cam > CJBS Marketing Group Seminars > A Better Tomorrow: Community Trust Can Protect Low-Income Groups From Myopic Decisions

A Better Tomorrow: Community Trust Can Protect Low-Income Groups From Myopic Decisions

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Why do poor people make poor decisions, in particular those that require delayed payoffs? Are there interventions that correct or mitigate such behavior? Temporal discounting requires individuals believe future payoffs will occur. Because low-income individuals have lower levels of generalized trust, they may be less likely to accurately forecast the value of future payoffs. We propose that the nature of generalized trust – that it expands to other domains of life – can be reversed by highlighting a relatively independent aspect of trust: that present in the local community. In lab and field studies conducted in the US and Bangladesh, we find that higher levels of community trust amongst low-income individuals can compensate for lower levels of generalized trust, and lead to a higher likelihood of delayed consumption. We discuss the implications of this approach as an intervention to help poor people make better decisions. The less poor individuals discount the future, the more likely they are to invest into activities that may alleviate their impoverished situation.

This talk is part of the CJBS Marketing Group Seminars series.

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