Working Paper: CEPR ID: DP10122
Authors: Oded Galor; Mer Zak
Abstract: This research explores the origins of the distribution of time preference across regions. It advances the hypothesis, and establishes empirically, that geographical variations in natural land productivity and their impact on the return to agricultural investment have had a persistent effect on the distribution of long-term orientation across societies. In particular, exploiting a natural experiment associated with the expansion of suitable crops for cultivation in the course of the Columbian Exchange, the research establishes that agro-climatic characteristics in the pre-industrial era that were conducive to higher return to agricultural investment, triggered selection and learning processes that had a persistent positive effect on the prevalence of long-term orientation in the contemporary era. This research explores the origins of the distribution of time preference across regions. It advances the hypothesis, and establishes empirically, that geographical variations in the incentives to delay consumption in favor of lucrative investment opportunities have had a persistent effect on the distribution of long-term orientation across societies. In particular, exploiting a natural experiment associated with the Columbian Exchange, the research establishes that agro-climatic characteristics in the pre-industrial era that were conducive to higher return to agricultural investment, triggered selection and learning processes that had a persistent positive effect on the prevalence of long-term orientation in the contemporary era.
Keywords: agriculture; culture; delayed gratification; economic development; economic growth; evolution; time preference
JEL Codes: O1; O4; Z1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher potential crop yields during the preindustrial era (N53) | increased long-term orientation of individuals in the modern period (F01) |
| descendants of individuals from regions with historically higher crop yields (O15) | exhibit higher long-term orientation (M14) |
| higher crop yields in parental countries (O57) | positively and significantly affect long-term orientation of second-generation migrants in Europe (F24) |
| long-term orientation (F01) | primarily determined by crop yield (Q11) |