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, whether measured in terms of contemporary income, historical development, or 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. Taken together, our results point to the importance of heterogeneity in time preferences for understanding comparative development.
The results establish that, within countries, average patience in geographical regions predicts both regional income per capita and average years of education. Analogous results obtain in individual-level analyses, where individual patience predicts both household income and educational attainment within countries and regions. Thus, our subnational results on the interplay between patience, accumulation processes, and income closely mirror those established in cross-country analyses, highlighting that our results are not driven by unobserved country characteristics or survey procedures.
The paper is very interesting. And definitely worth reading.
Academics are working hard to unlock ways of studying the correlation between culture and economic development. This is one such example. I like that the authors appreciated the reverse causality between patience and institutions. I wish they had done the same with the proximate determinants as well.
Patience does not strike me as something that springs from deep endowments. It is something that can be nurtured, for example, by increasing average years of schooling; or living in an environment that guaranteed physical security and a reasonable degree of predictability (see Blattman on fear).