To collect measures of health and time preference among a new sample of adults and elderly in peri-urban Durban, South Africa, with each age-stratum further divided into those who are healthy versus those who are not; to collect longitudinal measures of health and time preference among micro- and small-enterprise owners around Durban (also previously collected 2004); and to analyze relationships between health and the ‘individual discount rate’ and between changes in health and changes in the ‘individual discount rate.’
Time preference describes the ubiquitous phenomenon that individuals prefer to receive and to consume a reward sooner rather than later. The utility from consumption in the future is often “discounted” relative to the utility from consumption now of the same commodity bundle, ceteris paribus. Time preference drives futureoriented investment behavior, including savings for retirement, pursuit of healthy lifestyles, human capital investment for oneself and for one’s offsprings. Although theories in both evolutionary biology and economics predict that the individual’s health should be associated with the individual’s time preference, no prior study has been done to empirically support or refute such predictions. By collecting detailed measures of health, time preference, changes in health, and changes in time preference at two points in time, using both interviews and time preference trade-offs involving real monetary rewards on a sample of healthy and ailing adult and elderly individuals in black townships around Durban, South Africa, this study breaks new ground by being the first to analyze in detail the relationship between time preference and health, in an area of the world with high mortality and morbidity. The research question being addressed by this pilot project is policy relevant, as the study tries to determine the importance of health in economic development, not from the commonly asserted productivity-gain argument, but from a much broader investment-for-the-future argument. The pilot results will surely strengthen future funding proposals to examine the relationship between health and economic development.