Cash transfers, time preference, and productive choices

Cash transfers are shown to improve production, increase investment and induce productive practices by farmers. Despite a rich literature showing these desired outcomes, less is known about the pathways that produce these impacts. We use a large-scale cash transfer program in Sub-Saharan Africa to study if cash transfers affect input use by farmers through their impact on intertemporal choice. We exploit the random assignment of treatment to identify the indirect and total effect of the program and to isolate the influence of the time discounting channel from other transmission channels. We find that a small part of the total effect of cash transfers on input use is mediated through the increase in the patience of recipients.