| By: |
Francis Adu Amankwa-Poku (Ministry of Finance, Accra, Ghana);
Yoko Kijima (National Graduate Institute for Policy Studies, Tokyo, Japan) |
| Abstract: |
This study empirically examines whether periodic financial scarcity leads to
fluctuations in cognitive function and mental health and subsequently affects
optimal economic decision-making (risk aversion and present bias) among
low-paid employees in an urban area in Ghana. We collected the data of the
low-paid employees and randomly assigned them into two groups based on their
next payday and timing of the interview: those who were interviewed just
before their payday were financially more strained than those who were
interviewed just after their payday. The estimation results support the theory
of scarcity, showing that financial scarcity worsens cognitive function and
mental health. However, we found no evidence that financial scarcity affects
risk aversion and present bias as well as the quality of decision-making. |
| Keywords: |
Household decision making, cognitive function, present bias, risk aversion, mental health |
| Date: |
2026–04 |
| URL: |
https://d.repec.org/n?u=RePEc:ngi:dpaper:26-1 |