Committed to Education: School Fees, Vouchers, and the Timing of Cash Transfers
Abstract
Primary-school dropout remains widespread in Sub-Saharan Africa, and school fees are a major barrier to completion. In an experiment with 2,000 parents in eastern Uganda, we study whether time inconsistent preferences help explain why fees go unpaid. We elicit parents' willingness to pay for two restrictions on a cash transfer, delaying it until fees are due and, holding timing fixed, earmarking it as a voucher paid directly to the school. Demand for both restrictions is substantial. Sixty-nine percent of parents are willing to pay for earmarking and 62 percent for delay. We then randomly assign parents to receive the same amount as cash six weeks before fees are due, as cash when fees are due, as a voucher, or no transfer. Both cash transfers modestly increase fee payment, with no additional effect from delay. In contrast, the voucher substantially increases fee payment and reduces within-term dropout by more than half, without detectably worse household outcomes. Fee-day cash and the voucher also raise school attendance. The voucher's effects on fee payment and attendance are at least as large among parents who prefer cash as among those who prefer the voucher. This divergence partly reflects misprediction. Parents substantially underestimate the effect of earmarking on their own fee payment. In a model of quasi-hyperbolic discounting, these findings are consistent with partial naïveté, in which parents anticipate their own time inconsistency but underestimate its severity.