Author:
Falk, Armin (University of Bonn)
Hermle, Johannes (UC Berkley)
Sunde, Uwe (LMU Munich)
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
JEL-Classification:
D10; J10; O10