Dec 18
Time Preferences in Different Countries
Garret Jones, via twitter, links to a very interesting paper by the Swiss Finance Institutue. Mei Wang, Marc Oliver Rieger and Thorseten Hens did a study titled How Time Preferences Differ: Evidence from 45 Countries. In this study, they found that not all countries are equal. Richer countries were more likely to contain more patient citizens*. Countries with more punctuality and a higher working speed and more innovation also had more patient people.
The chart below measured what percent of the respondents decided to wait for $3800 next month rather than taking $3400 this month. If you look at the top of the chart where more people would wait for a monthly return of over 11%, you will generally find countries with less severe financial crises. At the bottom of the chart are countries who are either undeveloped or particuarly at risk of financial crisis. While it is possible that the current situation of countries like Greece and Spain make people very short term oriented, the different perspectives that these cultures have on time has been noted previous to the crisis so it is more likely that the shorter term perspective of their population is what helped get them into their current financial mess in the first place.
The US comes in slightly less patient than Ireland and more patient than Turkey. It is distinctly less patient than the German-Nordic countries. The paper notes that a larger sample done in a previous survey gave the US a score of only 40%, which is below even Greece in this sample. If the US is anything like Greece, this implies that it that people won't want to suffer through fiscal tightening now to make the future better, so spending without taxing is going to continue until it is stopped by a market crisis.
*It should be noted that their data was only on university students rather than the population as a whole
