Could your language affect your ability to save money Keith Chen

so the global economic financial crisis

has reignited public interest in

something that’s actually one of the

oldest questions and economics dating

back to at least before Adam Smith that

is why is it that countries with

seemingly similar economies and

institutions can display radically

different savings behavior

now many brilliant economists have spent

their entire lives working on this

question and as a field we’ve made a

tremendous amount of headway and we

understand a lot about this what I’m

here to talk with you about today is an

intriguing new hypothesis and some

surprisingly powerful new findings that

I’ve been working on about the link

between the structure of the language

you speak and how you find yourself with

the propensity to save let me tell you a

little bit about savings rates a little

bit about language and then I’ll draw

back I’ll draw that connection let’s

start by thinking about the member

countries of the OECD or the

organisation of Economic Cooperation and

Development OECD countries by and large

you should think about these as the

richest most industrialized countries in

the world and by joining the OECD they

were affirming a common commitment to

democracy open markets and free trade

despite all of these similarities we see

huge differences in savings behavior so

all the way over on the left of this

graph what you see is many OECD

countries saving over a quarter of their

GDP every year and some OECD countries

saving over a third of their GDP spur

year holding down the right flank of the

OECD all the way on the other side is

Greece and what you can see is that over

the last 25 years Greece has barely

managed to save more than 10% of their

GDP it should be noted of course that

the United States and the UK are the

next in line now that we see these huge

differences in savings rights how is it

possible that language might have

something to do with these differences

let me tell you a little bit about how

language is fundamentally there for

linguists and cognitive scientists have

been have been exploring this question

for for many years now and then I’ll

draw the connection between these two

behaviors

many of you have probably already

noticed that I’m Chinese I grew up in

the Midwest of the United States and

something I realized quite early on was

that the Chinese language forced me to

speak about and in fact more

fundamentally than that every so

slightly forced me to think about family

in very different ways now how might

that be let me give you an example

suppose I were I were talking with you

when I was introducing you to my uncle

okay you understood exactly what I just

said in English if we were speaking

Mandarin Chinese with each other though

I wouldn’t have that luxury

all right I wouldn’t have been able to

convey so little information what my

language would have forced me to do

instead of just telling you this is my

uncle is to tell you a tremendous amount

of additional information my language

would force me to tell you whether or

not this was an uncle on my mother’s

side or my father’s side whether this

was an uncle by marriage or by birth and

if this man was my father’s brother

whether he was older than or younger

than my father all of this information

is obligatory Chinese doesn’t let me

ignore it and in fact if I want to speak

correctly Chinese forces me to

constantly think about it now

that fascinated me endlessly as a child

but what fascinates me even more today

is an economist is that some of these

same differences carry through to how

languages speak about time 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 it’s Oram or

it’s going to rain it’s simply not

permissible in English to say it rained

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 speakers ears they can say

yesterday a train now a train tomorrow

would 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 know

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 regna desu quite literally to an

English ear

it rained tomorrow this led me to as a

behavioural economist - 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 future 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 disassociate 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 in 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 now this is a fanciful

theory you know I’m a professor I get

paid to have fanciful theories but how

would you actually go about testing such

a theory well what I did with then was

to access the linguistics literature and

interestingly enough there are pockets

of futureless language speakers situated

all over the world this is a pocket of

futureless language speakers in northern

europe interestingly enough when you

start to crank the data these pockets of

futureless language speakers all around

the world turn out to be by and large

some of the world’s best savers just to

give you a hint of that let’s look back

at that osed graph that we were talking

about once you see these bars are

systematically taller and systematically

shifted to the left compared to these

bars which are the members of the OECD

that speak future languages what is the

average difference here five percentage

points of your GDP saved per year over

25 years

has huge longer–and effects on the

wealth of your nation now while these

findings are suggestive countries can be

different in so many different ways that

it’s very very difficult sometimes to

account for all of these possible

differences what I’m going to show you

though is something that I’ve been

engaging in for a year which is trying

to gather all of the largest data sets

that we have access to are as economists

and I’m going to try and strip away all

of those possible differences hoping to

get this relationship to break all right

and just in summary no matter how far I

push this I can’t get it to break let me

show you how far you can do that one way

to imagine that is I gather large data

sets from around the world so for

example there’s the survey of health and

retirement in Europe from this data set

you actually learn that retired European

families are extremely patient with

survey takers so so imagine that you’re

a retired household in Belgium someone

comes to your front door excuse me would

you mind if I peruse your stock

portfolio do you happen to know how much

your house is worth you mind telling me

would you happen to have a hallway

that’s more than 10 meters long if you

do would you mind I timed how long it

took you to walk down that hallway

would you mind squeezing as hard as you

can in your dominant hand this device so

I can measure your grip strength

how about blowing into this tube so I

can measure your lung capacity right the

survey takes over a day combined that

okay with the demographic and health

survey collected by USAID in developing

countries in Africa for example where

which that survey actually can go so far

as to measure the aid directly measure

the HIV status of families living in for

example rural Nigeria combine that with

the world value survey which measures

the political opinions unfortunately for

me the savings behaviors of millions of

families in hundreds of countries around

the world

take all of that data combine it and

this map is what you get what you find

is nine countries around the world that

have significant native populations

which speak both future lists and future

languages and what I’m going to do is

form statistical matched pairs between

families that are nearly identical on

every dimension that I can measure

okay and then I’m gonna explore whether

or not the link between language and

savings holds even after controlling for

all of these levels what are the

characteristics we can control for well

I’m gonna match families on country of

birth and residence the demographics

what sex their age their income level

within their own country their

educational achievement a lot about

their family structure it turns out

there are six different ways to be

married in Europe and most grandeur

Lilly I break them down by religion

where there are 72 categories of

religions in the world so an extreme

level of granularity

there are 1.4 billion different ways

that a family can find itself okay

now effectively everything I’m going to

tell you from now on is only comparing

these basically nearly identical

families it’s getting as close as

possible to the thought experiment of

finding two families both of whom live

in Brussels who are identical on every

single one of these dimensions but one

of whom speaks Flemish and one of whom

speaks French or two families that live

in a rural district in Nigeria one of

whom speaks house' and one of whom

speaks egg Boh now even after all of

this granular level of control do

futureless language speakers seem to

save more yes futures language speakers

even after this level of control are 30

percent more likely to report having

saved in any given year does this have

cumulative effects yes by the time they

retire futures language speakers holding

constant their income are going to

retire with 25% more in savings can we

push this data even further yes because

I just told you we actually collect a

lot of health data as economists now how

can we think about health behaviors to

think about savings well think about

smoking for example smoking is in some

deep sense negative savings right if

savings is current pain in exchange for

future pleasure smoking is just the

opposite its current pleasure in

exchange for future pain what we should

expect then is the opposite effect and

that’s exactly what we find futureless

language speakers are 20 to 24 percent

less likely to be smoking in a given

point in time compared to identical

families and they’re going to be 13 to

70 percent less likely to be obese by

the time they retire and they’re gonna

report being 21 percent more likely to

have used a condom in their

sexual encounter I could go on and on

with the list of differences that you

can find it’s almost impossible not to

find a savings behavior for which this

strong effect isn’t present my

linguistics and economics colleagues at

Yale and I are just starting to do this

work and really explore and understand

the ways that these that these subtle

nudges cause us to think more or less

about the future every single time we

speak ultimately the goal once we

understand how these subtle effects can

change our decision-making we want to be

able to kind of provide people tools so

that they can consciously make

themselves better savers and more

conscious investors in their own future

thank you very much

you