Preferences along the Slope: Disentangling the Roles of Climate and Culture

Abstract

Economic preference are strongly heterogeneous across the globe. This paper adds to the study of the causes of this variation, using a novel and unique setting allowing to disentangle the roles of culture and climate on preference formation. In particular, we use data from the southern slope of Mount Kilimanjaro which exhibits a steep continuous gradient of ecological variation vis a vis minimal socio-political heterogeneity across space and time. Matching data on economic preferences from 14 villages with data on climatic conditions (i) between 1982 - 2011 and (ii) during the farming season directly preceding the preference data collection, we are able to distinguish between long-term and short-term effects of environmental conditions on economic preferences. Overall we find that variations in climatic baseline conditions can be related to variations in patience and risk tolerance along the mountain slope. Indicators of climate uncertainty increase risk aversion, larger exposure to extreme events however coerces more risk tolerance, and larger agricultural suitability increases patience. Findings on the role of climate on prosociality variables are less clear-cut. Joint paper with Susann Adloff.