How Time Preferences Differ: Evidence from 45 Countries

Abstract

We present results from the first large-scale international survey on time preference, conducted in 53 countries. All countries exhibit hyperbolic discounting patterns, i.e., the immediate future is discounted more than far future. We also observe higher heterogeneity for shorter time horizons, consistent with the pattern reviewed by Frederick, Loewenstein, and O'Donoghue (2002). Cultural factors as captured by the Hofstede cultural dimensions (Hofstede, 1991) contribute significantly to the variation of time discounting, even after controlling for economic factors, such as GDP, inflation rate and growth rate. In particular, higher levels of Uncertainty Avoidance are associated with stronger hyperbolic discounting, whereas higher degrees of Individualism and Long Term Orientation predict stronger tendency to wait for larger payoffs. We also find the waiting tendency is correlated with innovation, environmental protection, crediting rating, and body mass index at country level after controlling for county wealth. These results help us to enhance the understanding of differences across financial markets and economic behavior worldwide.

The economic psychology of incentives: An international study of top managers

“…Empirical investigations into prospect theory and time discounting, both of which are embedded in the behavioral-agency model via Equation (1), appear to indicate that, while there are measurable differences between countries, cultural differences do not cause risk, uncertainty and time preferences to depart from the general precepts of prospect theory and hyperbolic discounting. In other words, the behavior of people in most countries tends to be in accordance the general predictions of prospect theory and hyperbolic discounting (Rieger, Wang, & Hens, 2011;Wang, Rieger, & Hens, 2010). There are, nevertheless, measurable differences between national cultures.…”

“…While it is evident that there are indeed measurable differences between countries, what is also apparent is that cultural differences do not appear to cause risk, uncertainty and time preferences to depart from the general precepts of prospect theory and hyperbolic discounting, supporting the general argument of Rieger et al (2011) and Wang et al (2010).…”

“…Secondly, long-term versus short-term orientation (LTO), the fifth dimension of national cultures identified by Hofstede and Bond (1988), was, for self-evident reasons, predicted to be associated with the rank-order of temporal discounts (Wang et al, 2010).…”

Fiscal Multipliers and Time Preference

“…We report evidence of a large and statistically significant relationship between reported rates of time preference across countries and the government expenditure multiplier. This study uses recent cross-country data on reported rates of time preferences gathered by Wang, Rieger and Hens (2011). We find that a higher reported rate of time preference is strongly associated with a larger government expenditure multiplier.…”

Heterogeneity in Time Preferences and the Level of Savings, Debt and Investment: a Country Level Analysis

“…Dane dotyczące zmiennych kontrolnych pochodzą z 2011 r., tj. odpowiadają dacie udostępnienia pierwszej publikacji opisującej mię-dzynarodowe badanie preferencji czasowych [Wang, Rieger, Hens, 2011].…”