Stress and decision-making in a Developing world context

Abstract

This paper gauges the effect of physiological stress on time preference in the urban poor from informal settlements in Nairobi, Kenya. Using a standardized psychosocial stress challenge (the Trier social stress test (TSST)) to induce stress in a randomized setting, we attempt to estimate the effect of stress on decision making with incentive-compatible outcomes. While demonstrating discounting patterns similar to other research in the developed world, this current study finds some interesting results on the effect of stress on time preferences, but only in later periods. The study interprets this data and suggests methodological improvements and further ideas for this promising area of study.