Time preferences and political regimes: Evidence from reunified Germany

Tim Friehe and Markus Pannenberg

No 306, GLO Discussion Paper Series from Global Labor Organization (GLO)

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 to former residents of the Fed- eral 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 in uence 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: 2019
New Economics Papers: this item is included in nep-hea and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Journal Article: Time preferences and political regimes: evidence from reunified Germany (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:306

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