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How Time Preferences Differ: Evidence from 45 Countries

Author

Listed:
  • Wang, Mei

    () (WHU - Otto Beisheim School of Management)

  • Rieger, Marc Oliver

    () (Dept. IV, Business Administration, University of Trier)

  • Hens, Thorsten

    () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

Abstract

We present results from the first large-scale international survey on time discounting, conducted in 45 countries. Cross-country variation cannot simply be explained by economic variables such as interest rates or in ation. In particular, we find strong evidence for cultural differences, as measured by the Hofstede cultural dimensions. For example, high levels of Uncertainty Avoidance or Individualism are both associated with strong hyperbolic discounting. Moreover, as application of our data, we find evidence for an impact of time preferences on the capability of technological innovations in a country and on environmental protection.

Suggested Citation

  • Wang, Mei & Rieger, Marc Oliver & Hens, Thorsten, 2011. "How Time Preferences Differ: Evidence from 45 Countries," Discussion Papers 2011/18, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2011_018
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    File URL: http://hdl.handle.net/11250/164166
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    References listed on IDEAS

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    1. Mahajna, Ahmad & Benzion, Uri & Bogaire, Ravid & Shavit, Tal, 2008. "Subjective discount rates among Israeli Arabs and Israeli Jews," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2513-2522, December.
    2. Huang, Rocco R., 2007. "Distance and trade: Disentangling unfamiliarity effects and transport cost effects," European Economic Review, Elsevier, vol. 51(1), pages 161-181, January.
    3. Yesuf, Mahmud & Bluffstone, Randall, 2008. "Wealth and Time Preference in Rural Ethiopia," Discussion Papers dp-08-16-efd, Resources For the Future.
    4. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    5. Read, Daniel & Roelofsma, Peter H. M. P., 2003. "Subadditive versus hyperbolic discounting: A comparison of choice and matching," Organizational Behavior and Human Decision Processes, Elsevier, vol. 91(2), pages 140-153, July.
    6. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    7. E. S. Phelps & R. A. Pollak, 1968. "On Second-Best National Saving and Game-Equilibrium Growth," Review of Economic Studies, Oxford University Press, vol. 35(2), pages 185-199.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Cross-country variation in time preference
      by Jason Collins in Evolving Economics on 2013-11-18 19:27:27
    2. Where do pro-social institutions come from?
      by pseudoerasmus in Pseudoerasmus on 2015-10-04 05:01:30

    Citations

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    Cited by:

    1. Havranek, Tomas & Horvath, Roman & Irsova, Zuzana & Rusnak, Marek, 2015. "Cross-country heterogeneity in intertemporal substitution," Journal of International Economics, Elsevier, vol. 96(1), pages 100-118.
    2. Ken-Ichi Hirose & Shinsuke Ikeda, 2015. "Decreasing Marginal Impatience and Capital Accumulation in a Two-Country World Economy," Metroeconomica, Wiley Blackwell, vol. 66(3), pages 474-507, July.
    3. Fischer, Thomas, 2017. "Thomas Piketty and the rate of time preference," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 111-133.
    4. Thomas Dohmen & Benjamin Enke & Armin Falk & David Huffman & Uwe Sunde, 2016. "Patience and the Wealth of Nations," Working Papers 2016-012, Human Capital and Economic Opportunity Working Group.
    5. Wu, Tian & Shang, Zhe & Tian, Xin & Wang, Shouyang, 2016. "How hyperbolic discounting preference affects Chinese consumers’ consumption choice between conventional and electric vehicles," Energy Policy, Elsevier, vol. 97(C), pages 400-413.
    6. Eduardo A. Cavallo & Tomás Serebrisky & Verónica Frisancho & Jonathan Karver & Andrew Powell & Diego Margot & Ancor Suárez-Alemán & Eduardo Fernández-Arias & Matías Marzani & Solange Berstein & Marian, 2016. "Saving for Development: How Latin America and the Caribbean Can Save More and Better," IDB Publications (Books), Inter-American Development Bank, number 94597 edited by Eduardo A. Cavallo & Tomás Serebrisky, February.
    7. Marc Oliver Rieger & Thorsten Hens & Mei Wang, 2013. "International Evidence on the Equity Premium Puzzle and Time Discounting," Multinational Finance Journal, Multinational Finance Journal, vol. 17(3-4), pages 149-163, September.
    8. van der Pol, Marjon & Walsh, David & McCartney, Gerry, 2015. "Comparing time and risk preferences across three post-industrial UK cities," Social Science & Medicine, Elsevier, vol. 140(C), pages 54-61.
    9. Stelter, Robert, 2014. "Over-aging - Are present human populations too old?," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100334, Verein für Socialpolitik / German Economic Association.
    10. Otto Lenhart, 2018. "More than just the Adoption of Western Capitalism? Time Use Changes in East Germany Following Reunification," Journal of Labor Research, Springer, vol. 39(3), pages 306-328, September.
    11. repec:spr:agfoec:v:1:y:2013:i:1:p:1-19 is not listed on IDEAS
    12. Guest, Ross, 2018. "Does compulsory superannuation disadvantage middle income earners?," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 130-137.
    13. Falk, A. & Becker, A. & Dohmen, T.J. & Enke, B. & Huffman, D. & Sunde, U., 2015. "The nature and predictive power of preferences: Global evidence," Research Memorandum 039, Maastricht University, Graduate School of Business and Economics (GSBE).
    14. Fryer, Roland G., 2016. "Information, non-financial incentives, and student achievement: Evidence from a text messaging experiment," Journal of Public Economics, Elsevier, vol. 144(C), pages 109-121.
    15. Basu, Karna, 2014. "Commitment savings in informal banking markets," Journal of Development Economics, Elsevier, vol. 107(C), pages 97-111.
    16. repec:idb:idbbks:7677 is not listed on IDEAS
    17. Turnovsky, Stephen J., 2019. "Demographic structures, savings, and international capital flows," Journal of International Money and Finance, Elsevier, vol. 98(C), pages 1-1.

    More about this item

    Keywords

    Time preferences; Intertemporal decision; Endogenous preference; Cross-cultural comparison;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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