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Patience and the Wealth of Nations

Author

Listed:
  • Thomas Dohmen

    () (Universität Bonn)

  • Benjamin Enke

    () (University of Bonn)

  • Armin Falk

    () (Universität Bonn)

  • David Huffman

    () (University of Pittsburgh)

  • Uwe Sunde

    () (University of Munich)

Abstract

According to standard dynamic choice theories, patience is a key driving factor behind the accumulation of the proximate determinants of economic development. Using a novel representative data set on time preferences from 80,000 individuals in 76 countries, we investigate the empirical relevance of this hypothesis in the context of a development accounting framework. We find a significant reduced-form relationship between patience and development in terms of contemporary income as well as medium- and long-run growth rates, with patience explaining a substantial fraction of development differences across countries. Consistent with the idea that patience affects national income through accumulation processes, patience also strongly correlates with human and physical capital accumulation, investments into productivity, and institutional quality. Additional results show that the relationship between patience, human capital, and income extends to analyses across regions within countries, and across individuals within regions.

Suggested Citation

  • 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.
  • Handle: RePEc:hka:wpaper:2016-012
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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Dohmen_Enke_etal_2016_patience-wealth-nations.pdf
    File Function: First version, April, 2016
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    References listed on IDEAS

    as
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    Cited by:

    1. Alessandro Bucciol & Luca Zarri, 2016. "Does Saving Education Received From Parents Make Adults More Future-Oriented?," Working Papers 14/2016, University of Verona, Department of Economics.
    2. repec:eee:jeborg:v:145:y:2018:i:c:p:474-494 is not listed on IDEAS
    3. Ani Harutyunyan & Omer Ozak, 2016. "Culture, diffusion, and economic development," Working Papers LICOS Centre for Institutions and Economic Performance 551450, KU Leuven, Faculty of Economics and Business, LICOS Centre for Institutions and Economic Performance.
    4. Dessí, Roberta & Zhao, Xiaojian, 2018. "Overconfidence, stability and investments," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 474-494.
    5. Jaeggi, Adrian & Legge, Stefan & Schmid, Lukas, 2018. "Dyadic value distance: Determinants and consequences," Economics Letters, Elsevier, vol. 165(C), pages 48-53.
    6. Hübner, Malte & Vannoorenberghe, Gonzague, 2015. "Patience and long-run growth," Economics Letters, Elsevier, vol. 137(C), pages 163-167.
    7. Falk, A. & Becker, A. & Dohmen, T.J. & Enke, B. & Huffman, D. & Sunde, U., 2015. "The nature and predictive power of preferences : global evidence," ROA Research Memorandum 012, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    8. repec:eee:ecoedu:v:63:y:2018:i:c:p:134-153 is not listed on IDEAS
    9. Hübner, Malte & Vannoorenberghe, Gonzague, 2015. "Patience and Inflation," MPRA Paper 65811, University Library of Munich, Germany.
    10. Borissov, Kirill & Bosi, Stefano & Ha-Huy, Thai & Modesto, Leonor, 2016. "Inequality and Growth: The Role of Human Capital with Heterogeneous Skills," IZA Discussion Papers 10090, Institute for the Study of Labor (IZA).
    11. Guin, Benjamin, 2017. "Culture and household saving," Working Paper Series 2069, European Central Bank.
    12. Michał Brzoza-Brzezina & Jacek Kotlowski, 2016. "The nonlinear nature of country risk and its implications for DSGE models," NBP Working Papers 250, Narodowy Bank Polski, Economic Research Department.
    13. Brown, Martin & Henchoz, Caroline & Spycher, Thomas, 2017. "Culture and Financial Literacy," Working Papers on Finance 1703, University of St. Gallen, School of Finance.
    14. Mastrobuoni, Giovanni & Rivers, David A., 2016. "Criminal Discount Factors and Deterrence," IZA Discussion Papers 9769, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    time preference; comparative development; growth; savings; human capital; physical capital; innovation; institutions;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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