patience and the wealth of nations topics in behavioral and experimental economics ss 2015...
TRANSCRIPT
Patience and the Wealth of Nations
Topics in Behavioral and Experimental Economics SS 2015
Presentation: Dominik Schaufler
Paper by: Thomas Dohmen, Benjamin Enke, Armin Falk, David Huffman and
Uwe Sunde01/2015
Conceptual Framework
Source: Figure 1, Patience and the Wealth of Nation, p. 4
Hypotheses
• H1: At the aggregate level, patience exhibits a positive reduced-form correlation with income levels and income growth
• H2: Patience is correlated with proximate determinants, in terms of both their levels and corresponding accumulation processes. In addition, none of the proximate determinants alone fully captures the explanatory content of patience with respect to national income.
Hypotheses
• H3: The positive reduced-form relationship between patience and income, and the association between patience and accumulation decisions, extends to disaggregate data at the regional and individual level.
Data collection
• Global Preference Survey, 2012, 76 countries
• 4 noteworthy features:– Preference measures obtained in a comparable
way– Representative population samples– Reflects geographical representativeness– Experimental validated survey items
Measure of patience
• Quantitative: Staircase measure – choice between hypothetical payment today or payment
in 1 year – expressed in local currency
• Qualitative: self assessment on 11 point Scale how willing are you to give something up (completely unwilling to do so – very willing to do so)
• Linear combination makes up patience measure
• Patience = 0.711 Staircase measure + 0,288 Qualitative measure
World map of patience
Source: Figure 2, Patience and the Wealth of Nation
Source: Table 1, Patience and the Wealth of Nation
Sub Samples and Additional measures
• Patience and Effect on Continents odes the relationship exist within continents? – Patience explains around 40% of the variation within
continents (Continents, OECD, Colonized)• Alternative measures– GDP/worker, HDI, subjective statements of well being
• relationship not restricted to GDP/capita as measure.
Measuring Preferences
Unobserved factors?• 3 potential problematic areas: – Financial environment in terms of inflation,
interest rate, borrowing constraints– Context or culture specific interpretations– Systematic shortcuts due to cognitive limitations
Historical Income and growth rates
• If deep cultural roots there should be persistence over time– historical prediction should be possible– Account for population flows
• Higher steady state but also faster growth?– 1820, 1870, 1925, 1950, 1975, 2010• Unconditional correlation • Control for log per capita and continent fixed effects
Role of proximate determinants
• Can any single proximate determinant fully account for the relationship between patience and national income?– Patience and physical Capital (about a third of the
variation explained)– Patience and Human Capital (about 40% of
variation explained)
Patience, factor productivity and institutions
Total factor productivity, R&D expenditures as % of GDP, # Researchers in R&D, Global innovation indexNot only accumulation of factors but also relevant
for accumulation of knowledge + productivity
Institutions: democratic quality, property rights, social infrastructure index, S&P long term credit ratingPatience is a strong correlate of democracy, property
rights and social infrastructure
Condition on proximate determinants
• Relationship should weaken if conditioned on proximate determinants
• it does, but patience remains significant
• No proximate determinate alone fully accounts for explanatory content of patience
Patience within Countries
• (3rd Hypotheses)– Regional level (55 countries, 712 regions)• H3 confirmed, regions are influenced by different levels
of patience
– Individual level• Within countries more patient people tend to be richer
and have a higher education.
• Relationship holds at the individual level
Conclusion
• No identification of causal effects
• Existence of third factors?• Reverse causality?
• Framework with time preference as relevant driver empirically validated.
Thank you
Source: Table 1, Patience and the Wealth of Nation
Sub-Samples
Source: Table 2, Patience and the Wealth of Nation, p. 4
Alternative measures
Source: Table 3, Patience and the Wealth of Nation, p. 4
Historical income
Growth rates in the past 200 years
Patience and phsyical capital
Patience and human capital
Patience and productivity
Patience and institutions
Patience and proximate determinants
Regional patience
Individual patience