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The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets

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  • M. Keith Chen

Abstract

Languages differ widely in the ways they encode time. I test the hypothesis that the languages that grammatically associate the future and the present, foster future-oriented behavior. This prediction arises naturally when well-documented effects of language structure are merged with models of intertemporal choice. Empirically, I find that speakers of such languages: save more, retire with more wealth, smoke less, practice safer sex, and are less obese. This holds both across countries and within countries when comparing demographically similar native households. The evidence does not support the most obvious forms of common causation. I discuss implications for theories of intertemporal choice. (JEL D14, D83, E21, I12, J26, Z13)

Suggested Citation

  • M. Keith Chen, 2013. "The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets," American Economic Review, American Economic Association, vol. 103(2), pages 690-731, April.
  • Handle: RePEc:aea:aecrev:v:103:y:2013:i:2:p:690-731
    Note: DOI: 10.1257/aer.103.2.690
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    References listed on IDEAS

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    1. Rubinstein,Ariel, 2000. "Economics and Language," Cambridge Books, Cambridge University Press, number 9780521593069, May.
    2. Donald A. Redelmeier & Daniel N. Heller, 1993. "Time Preference in Medical Decision Making and Cost - Effectiveness Analysis," Medical Decision Making, , vol. 13(3), pages 212-217, August.
    3. Modigliani, Franco, 1986. "Life Cycle, Individual Thrift, and the Wealth of Nations," American Economic Review, American Economic Association, vol. 76(3), pages 297-313, June.
    4. M. Keith Chen, 2011. "The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets," Cowles Foundation Discussion Papers 1820, Cowles Foundation for Research in Economics, Yale University, revised Dec 2012.
    5. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    6. Martin Feldstein, 1980. "International Differences in Social Security and Saving," NBER Chapters, in: Econometric Studies in Public Finance, pages 225-244, National Bureau of Economic Research, Inc.
    7. James M. Poterba, 1994. "International Comparisons of Household Saving," NBER Books, National Bureau of Economic Research, Inc, number pote94-1, January-J.
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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