Community trust reduces myopic decisions of low-income individuals

People living in poverty are more likely to discount future payoffs compared with wealthier individuals, which can in part be attributed to the specific environment in which these decisions are made.

More than 1.5 billion people worldwide live in poverty. Even in the United States, 14% live below the poverty line. Despite many policies and programs, poverty remains a domestic and global challenge; the number of US households earning less than $2/d nearly doubled in the last 15 y. One reason why the poor remain poor is their tendency to make myopic decisions. With reduced temporal discounting, low-income individuals could invest more in forward-looking educational, financial, and social activities that could alleviate their impoverished situation. We show that increased community trust can decrease temporal discounting in low-income populations and test this mechanism in a 2-y field intervention in rural Bangladesh through a low-cost and scalable method that builds community trust.

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