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Time preferences and political regimes: evidence from reunified Germany

  • Tim FrieheEmail author
  • Markus Pannenberg
Original Paper
  • 8 Downloads

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.

Keywords

Time preferences Political regime Germany Natural experiment SOEP 

JEL Classification

D02 D12 

Notes

Acknowledgments

We gratefully acknowledge the very helpful comments made by Daniel Harenberg, Mario Mechtel, Hannah Schildberg-Hörisch, Georg Weizsäcker, and participants of the 2017 German Economic Association Meeting in Vienna on earlier versions of the paper. We are also very thankful for the insightful suggestions received from three anonymous reviewers.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Public Economics GroupUniversity of MarburgMarburgGermany
  2. 2.CESifoMunichGermany
  3. 3.EconomiXParisFrance
  4. 4.Department of Business and EconomicsUniversity of Applied Sciences BielefeldBielefeldGermany
  5. 5.IZABonnGermany
  6. 6.GLOMaastrichtNetherlands

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