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Patience and the Wealth of Nations

Thomas Dohmen, Benjamin Enke, Armin Falk, David Huffman and Uwe Sunde

No 2016-012, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: 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.

Keywords: time preference; comparative development; growth; savings; human capital; physical capital; innovation; institutions (search for similar items in EconPapers)
JEL-codes: D03 D90 O10 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-dem, nep-gro, nep-hpe, nep-hrm and nep-pke
Note: IP
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

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http://humcap.uchicago.edu/RePEc/hka/wpaper/Dohmen ... e-wealth-nations.pdf First version, April, 2016 (application/pdf)

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