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Patience and Comparative Development

Author

Listed:
  • Uwe Sunde

    (University of Munich, Department of Economics)

  • Thomas Dohmen

    (University of Bonn, Department of Economics)

  • Benjamin Enke

    (Harvard University, Department of Economics)

  • Armin Falk

    (Institute on Behavior and Inequality (briq) and University of Bonn)

  • David Huffman

    (University of Pittsburgh, Department of Economics)

Abstract

This paper studies the relationship between patience and comparative development through a combination of reduced-form analyses and model estimations. Based on a globally representative dataset on time preference in 76 countries, we document two sets of stylized facts. First, patience is strongly correlated with both per capita income and the accumulation of physical capital, human capital and productivity. These correlations hold across countries, subnational regions, and individuals. Second, the quantitative magnitude of the patience elasticity strongly increases in the level of aggregation. To provide an interpretive lens for these patterns, we analyze an OLG model in which savings and education decisions are endogenous to patience, and aggregate production is characterized by capital-skill complementarities. This model reconciles both the correlations between patience and macroeconomic variables as well as the substantial amplification of patience elasticities at higher levels of aggregation. The results of model estimations resemble the reduced-form patterns and suggest that cross-country variation in productivity plays an important role in generating the observed comparative development patterns and aggregation effects

Suggested Citation

  • Uwe Sunde & Thomas Dohmen & Benjamin Enke & Armin Falk & David Huffman, 2020. "Patience and Comparative Development," ECONtribute Discussion Papers Series 035, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:035
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    2. Domenico Delli Gatti & Jakob Grazzini & Domenico Massaro & Fabrizio Panebianco, 2022. "The Impact of Growth on the Transmission of Patience," CESifo Working Paper Series 9829, CESifo.
    3. Benjamin Enke & Thomas Graeber & Ryan Oprea & Thomas W. Graeber, 2023. "Complexity and Hyperbolic Discounting," CESifo Working Paper Series 10861, CESifo.
    4. Harry Pickard & Thomas Dohmen & Bert Van Landeghem, 2022. "Inequality and risk preference," Working Papers 2022022, The University of Sheffield, Department of Economics.
    5. Pablo Brañas-Garza & Diego Jorrat & Antonio M. Espín & Angel Sánchez, 2023. "Paid and hypothetical time preferences are the same: lab, field and online evidence," Experimental Economics, Springer;Economic Science Association, vol. 26(2), pages 412-434, April.
    6. Matteo Cervellati & Gerrit Meyerheim & Uwe Sunde, 2023. "The empirics of economic growth over time and across nations: a unified growth perspective," Journal of Economic Growth, Springer, vol. 28(2), pages 173-224, June.
    7. Alexander W. Cappelen & Benjamin Enke & Bertil Tungodden, 2022. "Moral Universalism: Global Evidence," CESifo Working Paper Series 10110, CESifo.
    8. Mevlut Tatliyer & Nurullah Gur, 2022. "Individualism and Working Hours: Macro-Level Evidence," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(2), pages 733-755, January.
    9. Florens Pfann & Gerard Pfann, 2024. "Can trust explain patience? A cross-country analysis," French Stata Users' Group Meetings 2024 02, Stata Users Group.
    10. Zhan, Crystal & Deole, Sumit, 2022. "Economic Preferences and the Self-selection of Immigrants," GLO Discussion Paper Series 1156, Global Labor Organization (GLO).
    11. Laura Alfaro & Ester Faia & Nora Lamersdorf & Farzad Saidi, 2022. "Health Externalities and Policy: The Role of Social Preferences," Management Science, INFORMS, vol. 68(9), pages 6751-6761, September.
    12. Etienne Dagorn & Martina Dattilo & Matthieu Pourieux, 2024. "The role of populations’ behavioral traits in policy-making during a global crisis: Worldwide evidence," Post-Print hal-04679593, HAL.
    13. Harry Pickard & Thomas Dohmen & Bert Landeghem, 2024. "Inequality and risk preference," Journal of Risk and Uncertainty, Springer, vol. 69(2), pages 191-217, October.
    14. Möhrle, Sascha & Sunde, Uwe, 2021. "Distance to the pre-industrial technological frontier, patience, and economic development," Economics Letters, Elsevier, vol. 201(C).

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    More about this item

    Keywords

    Time Preference; Comparative Development; Factor Accumulation;
    All these keywords.

    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
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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