Time preference seems to be a basic personality trait that has a strong impact on economic success. This was nicely illustrated in the Stanford Marshmellow Experiment, conducted in the 1960s and 1970s by the psychologist Walter Mischel. Children were given the choice to have one marshmellow now or two marshmallows in some minutes. Among the 600 children who went through the test, just few ate the marshmallow immediately, while many tried to resist but did not succeed (there are funny videos available on Youtube showing children struggling not to eat the marshmellow). About 30% of the children managed to wait long enough to get the second marshmellow. As it turned out, those children who managed to wait were significantly more successful in their later lives: they were perceived to be more reliable and competent, they had higher incomes, and they even performed better in the US university admission test SAT. Therefore, it is not surprising that time preference, or long-term orientation, is closely correlated with economic success. In a 2010 study by Wang, Rieger, and Hens (“How time preferences differ: evidence from 45 countries”, SFI Working Paper 09-47), people were asked whether they would rather like to have $3,400 this month or $3,800 next month. The only countries with waiting rates above 80% were Germany (89% preferred to wait), Austria (88%), Switzerland (86%), Norway (85%), and Denmark (84%). In the group of countries with waiting rates between 70% and 80% one can find, among others, Hong Kong, Canada (both 80%), Israel (78%), Sweden (76%), Japan (74%), South Korea (72%), and the UK (71%). Then follow countries like USA (68%), Turkey (64%), Portugal (60%), Mexico (58%), Romania (56%), Azerbaijan (48%), Greece (46%), and Russia (39%). Interestingly, the lowest waiting rate was observed in the only African country in the sample, namely in Nigeria, where only 8% of the subjects preferred to wait. iset.ge/blog/?p=2997&utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheIsetEconomist+%28The+ISET+Economist%29
Posted on: Tue, 11 Mar 2014 17:30:20 +0000
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