Becker Friedman Institute

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Patience and the Wealth of Nations

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.

Authors: 
Thomas Dohmen, Universität Bonn
Benjamin Enke, University of Bonn
Armin Falk, briq
David Huffman, Swarthmore College
Uwe Sunde, University of Munich
Publication Date: 
April, 2016
HCEO Working Groups: 
Publication Status: 
Document Number: 
2016-012
File Description: 
First version, April, 2016