We use experimental data from 35 randomly selected communities in Burundi to examine the impact of exposure to conflict on social-, risk- and time preferences. These types of preferences are important as they determine people’s propensity to invest and their ability to overcome social dilemmas, so that changes therein foster or hinder economic growth. We find that conflict affects preferences. Individuals that have been exposed to greater levels of violence display more altruistic behavior towards their neighbors, are more risk seeking, and have higher discount rates. Adverse, but temporary, shocks can thus alter savings and investments decisions, and potentially have long-run consequences.
Year: 2010 HiCN Working Paper No. 071