Patience is a virtue
One of the open questions of economic history is to explain why the industrial revolution began in England and Scotland and then spread to Europe. China and the Arab world were economically just as developed if not more so as England in the decades before the industrial revolution began, yet despite a proud history of innovation, these countries did not develop a capitalist market system and industrial machinery as the British did that would allow them to dominate the world in the subsequent one and a half centuries.
Many explanations for this conundrum have been proposed and there is probably no one factor that can be isolated. But in her book “Bourgeois Virtues” Deirdre McCloskey claims that it was a change in values that was developed during the reformation that led to the development of capitalism and with it the riches created since the industrial revolution. After all, during and after the reformation a clerical elite was replaced by a bourgeois elite of traders and merchants that were legitimised by their business acumen rather than some religious or genetic rules.
That value systems play an important role in creating wealth has now again been confirmed by a paper in the latest “Quarterly Journal of Economics”. Armin Falk and his co-authors examined global evidence on economic preferences by interviewing more than 80,000 people in 76 countries. The researchers looked at different variables from patience, risk taking, altruism, trust and others. Here, I want to focus on the one variable that had the strongest and most significant effect on economic development as measured by GDP per capita: patience.
They say patience is a virtue and indeed more patient people seem to be more successful in life, as is beautifully explained in this TED talk featuring the famous marshmallow experiment and some of the most endearing videos of children trying not to eat a marshmallow put in front of them.
Armin Falk and his colleagues show that patience is the only variable amongst all the variables they study that had a significant and positive effect at the country level. Higher risk tolerance, higher altruism, higher trust amongst members of the society, they all had either no significant positive, or even a negative influence, on economic success. Patience and the ability to delay gratification made a country successful. Looking at the results of the study, there are clear differences between countries in the willingness to delay gratification. People in Europe, North America and Australia are generally the most patient, while people living in Latin America, Eastern Europe, Africa and the Middle East are the least patient. The notable exception amongst emerging markets is China, where the population displays similar levels of patience to the UK and France.
But what drives people in one country (i.e. one culture) or another to be more patient? Political stability is clearly one factor that helps foster patience. After all, why should one save or invest for the future if tomorrow the country could end in a civil war or private property could be confiscated by the authorities? But it is not only political stability that matters. The authors find that patience is significantly correlated with Protestantism, a higher degree of individualism and a lower focus on family ties relative to other aspects in life. All of these cultural variables and their link to patience are in line with existing theories that link the spirit of capitalism to patience and vice versa. If you live in a society where family ties are weaker and your individual efforts are rated more highly by society than the achievements of the clan or the family, then this fosters personal investments of all kinds, from finance to investments in human capital – which in turn fosters the creation of wealth and faster societal development. And all of this comes from the willingness to forego consumption and wait for future rewards. It seems patience is not only a virtue, but an effective means to foster wealth and prosperity.
Differences in patience around the globe
Falk et al. (2018), Note: Blue = high patience; Red = low patience.