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 seen as a major barrier to completion. In an experiment with 2,000 parents and children in Uganda, we study whether time inconsistency contributes to unpaid school fees and lower school participation. We first elicit parents’ willingness to pay for two restrictions on a cash transfer: (1) delaying it until fees are due and (2) earmarking it as a voucher paid directly to the school, holding timing fixed. Demand for both restrictions is substantial: 62 percent of parents are willing to pay for delay and 69 percent for earmarking. We then randomly assign parents to three treatment arms and a control group. The three arms provide the same amount as cash six weeks before fees are due, as cash when fees are due, or as a voucher, and the control group receives no transfer. The voucher more than doubles fees paid, increases school attendance, and cuts within-term dropout by more than half. Cash has smaller effects on all three outcomes, with no additional effect from delayed cash over early cash. Perhaps surprisingly, the voucher’s effects on fee payment and attendance are largest among parents with low willingness to pay for it, in part because they substantially underestimate how much it will raise their fee payment relative to cash. 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.