Longevity and Patience

Armin Falk, Johannes Hermle and Uwe Sunde
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Johannes Hermle: UC Berkley
Uwe Sunde: LMU Munich

No 201, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Why does patience vary across individuals and countries? We provide evidence on a widely-hypothesized mechanism, namely that higher longevity fosters patience. Using data on patience for 80,000 individuals in 76 countries, this paper relates exogenous variation in longevity across gender-age-country cells to variation in patience. We find that a ten-year increase in life expectancy implies a 5-percentage point higher discount factor. This relationship emerges for various sub-samples and is unaffected by other determinants including lifetime experiences regarding economic development, institutional quality, or violence. We provide a model to discuss the implications for the emergence of poverty traps.

Keywords: time preferences; mortality; poverty traps (search for similar items in EconPapers)
JEL-codes: D10 J10 O10 (search for similar items in EconPapers)
Date: 2019-11-22
New Economics Papers: this item is included in nep-age and nep-dem
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:201

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