Patience and Comparative Development

Uwe Sunde, Thomas Dohmen, Benjamin Enke, Armin Falk, David Huffmann and Gerrit Meyerheim
Additional contact information
Benjamin Enke: Harvard University
David Huffmann: University of Pittsburgh
Gerrit Meyerheim: LMU Munich

No 292, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

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 per capita income and the accumulation of physical capital, human capital and productivity. These correlations hold across countries, subnational regions, and individuals. Second, the 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, aggregate production is characterized by capital-skill complementarities, and productivity implicitly depends on patience through a human capital externality. In our model estimations, general equilibrium effects alone account for a non-trivial share of the observed amplification effects, and an extension to human capital externalities can quantitatively match the empirical evidence.

Keywords: time preference; comparative development; factor accumulation (search for similar items in EconPapers)
JEL-codes: D03 D90 O10 O30 O40 (search for similar items in EconPapers)
Date: 2021-11-11
New Economics Papers: this item is included in nep-dge, nep-evo and nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Patience and Comparative Development (2023)
Journal Article: Patience and Comparative Development (2022)
Working Paper: Patience and Comparative Development (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:292

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