Poor and rational: Decision-making under scarcity

Abstract: A growing literature associates poverty with anomalies in decision-making. We investigate this link in a sample of over 3,000 small-scale farmers in Zambia, who were given the opportunity to exchange randomly assigned household items for alternative items of similar value. Analyzing a total of 5,842 trading decisions over a range of items, including cash, we show that exchange asymmetries are sizable and remarkably robust across items and experimental procedures.

• Kelsey Jack