Template-Type: ReDIF-Paper 1.0
Title: Patience and Comparative Development
Author-Name: Uwe Sunde
Author-Email: uwe.sunde@lmu.de
Author-Name: Thomas Dohmen
Author-Email: tdohmen@uni-bonn.de
Author-Name: Benjamin Enke
Author-Email: enke@fas.harvard.edu
Author-Name: Armin Falk
Author-Email: armin.falk@briq-institute.org
Author-Name: David Huffman
Author-Email: huffmand@pitt.edu
Author-Name: Gerrit Meyerheim
Author-Email: gerrit.meyerheim@econ.lmu.de

Classification-JEL: D03, D90, O10, O30, O40
Keywords: Time Preference, Comparative Development, Factor Accumulation

Abstract: This paper studies the relationship between patience and comparative development
through a combination of reduced-form analyses and model estimations. Based
on a globally representative dataset on time preference in 76 countries, we document
two sets of stylized facts. First, patience is strongly correlated with per capita income
and the accumulation of physical capital, human capital and productivity. These
correlations hold across countries, subnational regions, and individuals. Second, the
magnitude of the patience elasticity strongly increases in the level of aggregation. To
provide an interpretive lens for these patterns, we analyze an OLG model in which
savings and education decisions are endogenous to patience, aggregate production is
characterized by capital-skill complementarities, and productivity implicitly depends
on patience through a human capital externality. In our model estimations, general
equilibrium effects alone account for a non-trivial share of the observed amplification
effects, and an extension to human capital externalities can quantitatively match
the empirical evidence.

Note: 
Length: 81
Creation-Date: 2023-01
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp293
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2023_293v2