Time preferences and political regimes: evidence from reunified Germany

Tim Friehe and Markus Pannenberg ()
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Markus Pannenberg: University of Applied Sciences Bielefeld

Journal of Population Economics, 2020, vol. 33, issue 1, No 10, 349-387

Abstract: Abstract We use the separation and later reunification of Germany after World War II to show that a political regime shapes time preferences of its residents. Using two identification strategies, we find that former residents of the German Democratic Republic exhibit a significantly less pronounced present bias when compared with former residents of the Federal Republic of Germany, whereas measures of patience are statistically indistinguishable. Interpreting the years spent under the regime as a proxy for treatment intensity yields consistent results. Moreover, we present evidence showing that present bias predicts choices in the domains of health, finance, and education, thereby illustrating lasting repercussions of a regime’s influence on time preferences.

Keywords: Time preferences; Political regime; Germany; Natural experiment; SOEP (search for similar items in EconPapers)
JEL-codes: D02 D12 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (29)

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DOI: 10.1007/s00148-019-00728-7

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