How time preferences of populations vary with political regimes: The case of Germany

An article in the January 2020 issue of the Journal of Population Economics reveals that former residents of the German Democratic Republic have a smaller present bias than former residents of the Federal Republic of Germany.

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Time preferences and political regimes: evidence from reunified Germany
Tim Friehe & Markus Pannenberg

READ LINK: https://rdcu.be/bXokz

Journal of Population Economics 33 (2020), 349–387
GLO Discussion Paper No. 306, 2019.

GLO Fellow Markus Pannenberg

Author Abstract: We use the separation and later reunification of Germany after World War II to show that a political regime shapes time preferences of its residents. Using two identification strategies, we find that former residents of the German Democratic Republic exhibit a significantly less pronounced present bias when compared with former residents of the Federal Republic of Germany, whereas measures of patience are statistically indistinguishable. Interpreting the years spent under the regime as a proxy for treatment intensity yields consistent results. Moreover, we present evidence showing that present bias predicts choices in the domains of health, finance, and education, thereby illustrating lasting repercussions of a regime’s influence on time preferences.

Read also the Lead Article of issue 1 (2020):
Hate at first sight? Dynamic aspects of the electoral impact of migration: the case of Ukip
Eugenio Levi, Rama Dasi Mariani & Fabrizio Patriarca
FREE READ LINK: https://rdcu.be/bXnWI
Journal of Population Economics, Vol. 33 (2020), Issue 1 (January), pp. 1-32.
GLO Fellows Eugenio Levi, Rama Dasi Mariani & Fabrizio Patriarca
Complete issue 1, read access to all articles.

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