CFDP 1820

The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets

Author(s): 

Publication Date: August 2011

Revision Date: December 2012

Pages: 56

Abstract: 

Languages differ widely in the ways they encode time. I test the hypothesis that languages that grammatically associate the future and the present, foster future-oriented behavior. This prediction arises naturally when well-documented effects of language structure are merged with models of intertemporal choice. Empirically, I find that speakers of such languages: save more, retire with more wealth, smoke less, practice safer sex, and are less obese. This holds both across countries and within countries when comparing demographically similar native households. The evidence does not support the most obvious forms of common causation. I discuss implications for theories of intertemporal choice.

Keywords: 

Language, Time preference, Intertemporal choice, Savings behavior, Health, National savings rates, Sapir-Whorf hypothesis

JEL Classification Codes:  D03, D14, D91, E21, I10