Universal time preference

Abstract

Time preferences are central to human decision making; therefore, a thorough understanding of their international differences is highly relevant. Previous measurements, however, vary widely in their methodology, from questions answered on the Likert scale to lottery-type questions. We show that these different measurements correlate to a large degree and that they have a common factor that can predict a broad spectrum of variables: the countries’ credit ratings, gasoline prices (as a proxy for environmental protection), equity risk premiums, and average years of school attendance. The resulting data on this time preference factor for N = 117 countries and regions will be highly useful for further research. Our aggregation method is applicable to merge cross-cultural studies that measure the same latent construct with different methodologies.