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Spending money on goods that satisfy oneself at the moment but not necessarily in the future – temptation goods – is a bothersome habit that applies to most people. However, with very low income, spending on temptation goods can potentially trap a household in chronic poverty, as such spending further minimizes the little financial resources crucially needed. Yet, although studies have included temptation goods into their household analysis, there is no empirical in-depth investigation of what exactly is perceived as a temptation good by one of the most marginalized groups: smallholder farmers residing in the Global South. Therefore, employing descriptive statistics and hierarchical cluster analysis, this paper presents an empirical definition of temptation goods provided by 277 smallholder farmers from rural Cambodia. Our findings partly differ from those found in the literature. For example, while farmers most frequently perceive alcohol, tobacco, and sweets as tempting, they also define unexpected items such as communication, recreation and entertainment, fruit, clothes, and going to the hairdresser as temptation goods. The results hold strong importance for accurate calculations and to understand the often puzzling spending behaviour of the poor, as well as coming up with custom-fit policy interventions that promote long-term welfare-increasing consumption behaviour.

An empirical identification of temptation goods: Perceptions of Cambodian smallholder farmers