The global financial crisis has sparked renewed interest in a fundamental economic question: why do countries with similar economies and institutions exhibit vastly different savings behaviors? Many economists have dedicated their careers to unraveling this mystery, and we’ve made significant strides in understanding it. Today, let’s delve into a fascinating hypothesis that explores the connection between the language you speak and your tendency to save money.
Let’s begin by examining the member countries of the OECD (Organization for Economic Cooperation and Development). These nations are among the wealthiest and most industrialized globally, committed to democracy, open markets, and free trade. Despite these commonalities, their savings behaviors differ significantly. For instance, many OECD countries save over a quarter of their GDP annually, with some exceeding a third. In stark contrast, Greece has struggled to save more than 10% of its GDP over the past 25 years, with the United States and the UK not far behind.
How might language influence these differences in savings rates? Linguists and cognitive scientists have long pondered this question. Growing up in the Midwest of the United States, I noticed how the Chinese language shaped my thoughts about family. In English, introducing an uncle is straightforward: “this is my uncle.” However, in Mandarin Chinese, you must specify whether the uncle is related by birth or marriage and whether he is older or younger than your father. This linguistic requirement forces speakers to think about family relationships more deeply.
This linguistic distinction extends to how languages express time. In English, we modify our speech based on whether we’re discussing the past, present, or future. For example, we say “it rained yesterday,” “it is raining now,” or “it will rain tomorrow.” In contrast, a Chinese speaker might say something that sounds unusual to an English speaker, like “yesterday it rained, now it rain tomorrow.” This difference suggests that languages can shape our perception of time.
Interestingly, English is an outlier among Germanic languages, as most other Germanic languages don’t require such distinctions. This observation led me to hypothesize that the way a language structures time could impact savings behavior. If speaking a future-oriented language makes individuals perceive the future as more distant, it might hinder their ability to save. Conversely, speakers of futureless languages may find it easier to save because they perceive the present and future more similarly.
To test this hypothesis, I examined data from various linguistic studies. I discovered that futureless language speakers around the world tend to be some of the best savers. When comparing savings rates, futureless language speakers saved, on average, five percentage points more of their GDP per year over 25 years compared to speakers of future languages.
While these findings are intriguing, it’s crucial to account for other differences among countries. I’ve been gathering extensive datasets to isolate the relationship between language and savings. For instance, I analyzed data from the Survey of Health and Retirement in Europe, the Demographic and Health Survey from USAID, and the World Values Survey, which measures the savings behaviors of families worldwide.
By matching families that are nearly identical in every measurable dimension, I found that futureless language speakers are still 30% more likely to report having saved in any given year. This effect accumulates, leading to future language speakers retiring with 25% more in savings, even when controlling for income.
Additionally, I explored how language influences health behaviors related to savings. For example, smoking can be seen as a form of negative savings. Futureless language speakers are less likely to smoke and report being less likely to be obese by retirement. They are also more likely to have used protection during sexual encounters.
My colleagues and I at Yale are beginning to explore these subtle influences of language on decision-making. Ultimately, our goal is to understand how these effects can help individuals become better savers and more conscious investors in their futures. Thank you for joining me on this exploration of language and savings behavior.
Engage in a debate with your classmates about the hypothesis that language structure affects savings behavior. Divide into two groups: one supporting the hypothesis and the other challenging it. Use evidence from the article and additional research to support your arguments.
Conduct a comparative analysis of different languages and their structures related to time. Identify whether they are future-oriented or futureless. Present your findings in a group presentation, discussing how these linguistic features might influence financial behaviors in those cultures.
Participate in a workshop where you analyze datasets related to savings behaviors and language structures. Use statistical software to explore correlations and present your findings. Discuss how controlling for other factors can influence the interpretation of data.
Research how language might influence health behaviors, similar to its impact on savings. Write a short paper on your findings, considering factors such as smoking, obesity, and safe practices. Share your insights with the class in a roundtable discussion.
Write a reflective essay on how your own language might influence your financial and health behaviors. Consider your personal experiences and any cultural influences. Share your essay with a peer for feedback and discuss any surprising insights.
**Sanitized Transcript:**
[Music] The global economic financial crisis has reignited public interest in a fundamental question in economics: why do countries with seemingly similar economies and institutions display radically different savings behaviors? Many brilliant economists have dedicated their lives to this question, and we have made significant progress in understanding it. Today, I want to discuss an intriguing new hypothesis and some powerful findings regarding the link between the structure of the language you speak and your propensity to save.
Let’s start by considering the member countries of the OECD (Organization for Economic Cooperation and Development). These countries are generally the richest and most industrialized in the world, and by joining the OECD, they affirm a commitment to democracy, open markets, and free trade. Despite these similarities, we observe significant differences in savings behavior. For instance, many OECD countries save over a quarter of their GDP each year, with some saving over a third. In contrast, Greece has struggled to save more than 10% of its GDP over the last 25 years, with the United States and the UK following closely behind.
Given these differences in savings rates, how might language play a role? Linguists and cognitive scientists have explored this question for years. I grew up in the Midwest of the United States and realized early on that the Chinese language influenced how I thought about family. For example, if I were introducing you to my uncle in English, I could simply say “this is my uncle.” However, in Mandarin Chinese, I would need to provide additional information, such as whether he is my uncle by birth or marriage, and whether he is older or younger than my father. This requirement to convey more information forces speakers to think about family relationships differently.
This linguistic difference extends to how languages express time. In English, we must modify our speech based on whether we are discussing the past, present, or future. For example, we say “it rained yesterday,” “it is raining now,” or “it will rain tomorrow.” In contrast, a Chinese speaker might say something that sounds strange to an English speaker, like “yesterday it rained, now it rain tomorrow.” This difference suggests that languages can influence how we perceive time.
Interestingly, English is an outlier among Germanic languages, as most other Germanic languages do not require such distinctions. This led me to hypothesize that the way a language structures time could affect savings behavior. If speaking a future-oriented language makes individuals perceive the future as more distant, it may hinder their ability to save. Conversely, speakers of futureless languages may find it easier to save because they perceive the present and future more similarly.
To test this hypothesis, I examined data from various linguistic studies. I found pockets of futureless language speakers around the world, and when analyzing the data, these groups tended to be some of the best savers. For instance, when comparing savings rates, futureless language speakers saved, on average, five percentage points more of their GDP per year over 25 years compared to speakers of future languages.
While these findings are suggestive, it is essential to control for other differences among countries. I have been gathering large datasets to strip away these variables and isolate the relationship between language and savings. For example, I analyzed data from the Survey of Health and Retirement in Europe, the Demographic and Health Survey from USAID, and the World Values Survey, which measures the savings behaviors of families worldwide.
By matching families that are nearly identical in every measurable dimension, I found that futureless language speakers are still 30% more likely to report having saved in any given year. This effect accumulates, leading to future language speakers retiring with 25% more in savings, even when controlling for income.
Additionally, I explored health behaviors as they relate to savings. For example, smoking can be viewed as a form of negative savings. Futureless language speakers are less likely to smoke and report being less likely to be obese by retirement. They are also more likely to have used protection during sexual encounters.
My colleagues and I at Yale are beginning to explore these subtle influences of language on decision-making. Ultimately, our goal is to understand how these effects can help individuals become better savers and more conscious investors in their futures. Thank you very much.
[Music]
Savings – The portion of income not spent on current expenditures and set aside for future use, often in a bank or investment account. – Many individuals increase their savings during economic downturns to prepare for potential financial instability.
Language – A system of communication used by a particular community or country, which can influence economic transactions and negotiations. – The language barrier between the two countries affected their trade agreements and economic partnerships.
Behavior – The actions or reactions of individuals or groups in response to external or internal stimuli, often studied in economics to understand consumer choices. – Consumer behavior during the holiday season often leads to increased spending and economic growth.
Future – The time yet to come, often considered in economic planning and forecasting to make informed decisions. – Economists use models to predict future trends in the economy and advise policymakers accordingly.
Economy – The system of production, distribution, and consumption of goods and services within a society or geographic area. – The global economy has been significantly impacted by technological advancements and international trade policies.
Psychology – The scientific study of the mind and behavior, which can provide insights into economic decision-making processes. – Behavioral economics combines psychology and economics to better understand how people make financial decisions.
Countries – Nations with their own governments and economies, which interact through trade, diplomacy, and cultural exchange. – Developing countries often face challenges in achieving economic growth due to limited resources and infrastructure.
Decisions – Choices made after considering various options and potential outcomes, crucial in both economic and psychological contexts. – Financial decisions made by individuals can have long-term impacts on their economic stability and well-being.
Health – The state of physical and mental well-being, which can influence and be influenced by economic conditions. – Economic policies that promote health care access can lead to a more productive workforce and improved economic outcomes.
Investment – The allocation of resources, usually money, in order to generate income or profit, often considered a key driver of economic growth. – Long-term investment in education and infrastructure is essential for sustainable economic development.
