Date of Graduation

Spring 5-17-2013

Document Type

Thesis

College/School

College of Arts and Sciences

First Advisor

Alessandra Cassar

Abstract

The motivation for this research is to explore the success behind the Oakland based Family Independence Initiative (FII) as a model for poverty alleviation. During the period of June-December 2012, nearly 200 small business owners in Medellin, Colombia participated in a field experiment intended to replicate the FII model by randomizing the treatments of setting goals, receiving conditional payments, and participating in self-help groups, as well as the combinations thereof. The data shows that the subjects in the full FII treatment group achieve more goals and have significantly higher monthly sales than those subjects in any other treatment or control group. Given its success, this research explores the merits of a change in subjects’ time preferences as a mechanism explaining the changes in behavior caused by participation in the FII program. The subjects’ time preferences were measured via survey using a combination of the binary choice and fill-in-the-blank methods on three different occasions throughout the experiment. The data indicates that participating in the FII experiment does indeed change subject’s time preferences, suggesting they become more patient and less present- biased over time. Examining how time preferences can change over time is particularly useful when discussing poverty alleviation, as inter-temporal choices affect a range of behaviors such as saving, borrowing, and various types of investment, all of which affect economic well-being.