Subjective Well-Being, Risk Perceptions and Time Discounting

The risk and time preferences of individuals as well as their subjective expectations regarding the future are likely to play an important role in choice behaviour. Measurement of these individual characteristics in large-scale surveys has been a recent development and empirical evidence on their associations with behaviour remains limited. We summarize the results of measuring individuals’ attitudes towards inter-temporal choice, risk, and the future in a large-scale field survey in Kenya. We also examine the impact of a cash transfer programme on these preferences and expectations. We find very low rates of inconsistency in interpreting questions on time and risk preferences. Cash transfers alone do not appear to impact time discounting or risk aversion, but they do have an important impact on subjective well-being measures and on future perceptions of quality of life. These in turn may affect forward-looking decisions such as financial and human capital investment, although this is not explored in this paper and remains part of the future research agenda.