The language you use affects your ability to save money

Why do some people save more than others? 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 this TED Talk,  discover why countries differ not only in how much their residents save for the future, but also how their native speakers talk about the future.  The presenter is behavioral economist Keith Chen.

The best bit:

So for example,

if I’m speaking in English, I have to speak grammatically differently if I’m talking about past rain, “It rained yesterday,” current rain, “It is raining now,” or future rain, “It will rain tomorrow.” Notice that English requires a lot more information with respect to the timing of events. Why? Because I have to consider that and I have to modify what I’m saying to say, “It will rain,” or “It’s going to rain.” It’s simply not permissible in English to say, “It rain tomorrow.”

In contrast to that, that’s almost exactly what you would say in Chinese. A Chinese speaker can basically say something that sounds very strange to an English speaker’s ears. They can say, “Yesterday it rain,” “Now it rain,” “Tomorrow it rain.” In some deep sense, Chinese doesn’t divide up the time spectrum in the same way that English forces us to constantly do in order to speak correctly.

Is this difference in languages only between very, very distantly related languages, like English and Chinese? Actually, no. So many of you know, in this room, that English is a Germanic language. What you may not have realized is that English is actually an outlier. It is the only Germanic language that requires this. For example, most other Germanic language speakers feel completely comfortable talking about rain tomorrow by saying, “Morgen regnet es,” quite literally to an English ear, “It rain tomorrow.”

This led me, as a behavioral economist, to an intriguing hypothesis. Could how you speak about time, could how your language forces you to think about time, affect your propensity to behave across time? You speak English, a futured language. And what that means is that every time you discuss the future, or any kind of a future event, grammatically you’re forced to cleave that from the present and treat it as if it’s something viscerally different. Now suppose that that visceral difference makes you subtly dissociate the future from the present every time you speak. If that’s true and it makes the future feel like something more distant and more different from the present, that’s going to make it harder to save. If, on the other hand, you speak

a futureless language, the present and the future, you speak about them identically. If that subtly nudges you to feel about them identically, that’s going to make it easier to save.

 Figure below measures the percent of time weather forecasts use future vs. present tenses

Graph of Future Tense Use

Share this:

Economist: China's capital spend to overtake US

Economist: China vs US capital spend

The Economist this week reported China's fixed-asset investment leapt by an astonishing 39% in the year to May, or by a record 49% in real terms.

This year China’s domestic investment in dollar terms is likely to exceed that in America (see chart).

There are concerns that a lot of the investment is directed by the Chinese government, and hence a lot of it would be wasted in pushing out overcapacity.

Investment amounted to 44% of GDP last year (compared with 18% in America), which many economists reckon was already too much. Worse still, as well as forcing state firms to invest, the government is directing state-owned banks to lend more, despite falling corporate profits.

The fastest expansion in spending has been in railways (up by 111% this year). As a developing country, China still lacks decent infrastructure; railways, in particular, have long been an economic bottleneck. Investment in roads, the power grid and water should also yield high long-term returns by allowing China to sustain rapid growth.

Further evidence that increasingly New Zealand will be engaging more with China as reliance on our traditional Western markets wane. The Americans will struggle with maintaining market dominance, and the developing economies will no doubt emerge stronger as a result of this recession.

zp8497586rq
Share this: