Thursday, February 28, 2013

Could your language affect your ability to save money?

What can economists learn from linguists? Behavioral economist Keith Chen introduces a fascinating pattern from his research: that languages without a concept for the future -- "It rain tomorrow," instead of "It will rain tomorrow" -- correlate strongly with high savings rates.



Source: TED

How are China, Estonia and Germany different from India, Greece and the UK? To an economist, one answer is obvious: savings rates. Germans save 10 percentage points more than the British do (as a fraction of GDP), while Estonians and Chinese save a whopping 20 percentage points more than Greeks and Indians.

Economists think a lot about what drives people to save, but many of these international differences remain unexplained. In a recent paper of mine, I find that these countries differ not only in how much their residents save for the future, but also how their native speakers about the future.

See the full story here.

Geir Solem

Elliott Wave Technician
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