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Longevity and Patience

Author

Listed:
  • 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.

Suggested Citation

  • Falk, Armin & Hermle, Johannes & Sunde, Uwe, 2019. "Longevity and Patience," Rationality and Competition Discussion Paper Series 201, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:201
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    File URL: https://rationality-and-competition.de/wp-content/uploads/2019/11/201.pdf
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    More about this item

    Keywords

    time preferences; mortality; poverty traps;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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