Could your language affect your ability to save money?
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0:00 - 0:05The global economic financial crisis has reignited public interest
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0:05 - 0:08in something that's actually one of the oldest questions in economics,
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0:08 - 0:11dating back to at least before Adam Smith.
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0:11 - 0:17And that is, why is it that countries with seemingly similar economies and institutions
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0:17 - 0:20can display radically different savings behavior?
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0:20 - 0:24Now, many brilliant economists have spent their entire lives working on this question,
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0:24 - 0:28and as a field we've made a tremendous amount of headway
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0:28 - 0:30and we understand a lot about this.
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0:30 - 0:34What I'm here to talk with you about today is an intriguing new hypothesis
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0:34 - 0:38and some surprisingly powerful new findings that I've been working on
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0:38 - 0:43about the link between the structure of the language you speak
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0:43 - 0:47and how you find yourself with the propensity to save.
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0:47 - 0:50Let me tell you a little bit about savings rates, a little bit about language,
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0:50 - 0:52and then I'll draw that connection.
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0:52 - 0:57Let's start by thinking about the member countries of the OECD,
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0:57 - 1:00or the Organization of Economic Cooperation and Development.
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1:00 - 1:04OECD countries, by and large, you should think about these
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1:04 - 1:07as the richest, most industrialized countries in the world.
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1:07 - 1:11And by joining the OECD, they were affirming a common commitment
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1:11 - 1:14to democracy, open markets and free trade.
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1:14 - 1:19Despite all of these similarities, we see huge differences in savings behavior.
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1:19 - 1:21So all the way over on the left of this graph,
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1:21 - 1:26what you see is many OECD countries saving over a quarter of their GDP every year,
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1:26 - 1:31and some OECD countries saving over a third of their GDP per year.
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1:31 - 1:36Holding down the right flank of the OECD, all the way on the other side, is Greece.
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1:36 - 1:39And what you can see is that over the last 25 years,
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1:39 - 1:43Greece has barely managed to save more than 10 percent of their GDP.
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1:43 - 1:50It should be noted, of course, that the United States and the U.K. are the next in line.
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1:50 - 1:52Now that we see these huge differences in savings rates,
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1:52 - 1:56how is it possible that language might have something to do with these differences?
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1:56 - 1:59Let me tell you a little bit about how languages fundamentally differ.
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1:59 - 2:05Linguists and cognitive scientists have been exploring this question for many years now.
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2:05 - 2:09And then I'll draw the connection between these two behaviors.
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2:09 - 2:12Many of you have probably already noticed that I'm Chinese.
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2:12 - 2:15I grew up in the Midwest of the United States.
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2:15 - 2:17And something I realized quite early on
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2:17 - 2:21was that the Chinese language forced me to speak about and --
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2:21 - 2:24in fact, more fundamentally than that --
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2:24 - 2:28ever so slightly forced me to think about family in very different ways.
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2:28 - 2:30Now, how might that be? Let me give you an example.
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2:30 - 2:34Suppose I were talking with you and I was introducing you to my uncle.
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2:34 - 2:37You understood exactly what I just said in English.
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2:37 - 2:40If we were speaking Mandarin Chinese with each other, though,
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2:40 - 2:42I wouldn't have that luxury.
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2:42 - 2:45I wouldn't have been able to convey so little information.
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2:45 - 2:47What my language would have forced me to do,
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2:47 - 2:49instead of just telling you, "This is my uncle,"
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2:49 - 2:53is to tell you a tremendous amount of additional information.
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2:53 - 2:55My language would force me to tell you
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2:55 - 2:58whether or not this was an uncle on my mother's side or my father's side,
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2:58 - 3:01whether this was an uncle by marriage or by birth,
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3:01 - 3:03and if this man was my father's brother,
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3:03 - 3:06whether he was older than or younger than my father.
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3:06 - 3:10All of this information is obligatory. Chinese doesn't let me ignore it.
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3:10 - 3:12And in fact, if I want to speak correctly,
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3:12 - 3:15Chinese forces me to constantly think about it.
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3:15 - 3:19Now, that fascinated me endlessly as a child,
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3:19 - 3:23but what fascinates me even more today as an economist
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3:23 - 3:28is that some of these same differences carry through to how languages speak about time.
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3:28 - 3:32So for example, if I'm speaking in English, I have to speak grammatically differently
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3:32 - 3:35if I'm talking about past rain, "It rained yesterday,"
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3:35 - 3:37current rain, "It is raining now,"
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3:37 - 3:40or future rain, "It will rain tomorrow."
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3:40 - 3:44Notice that English requires a lot more information with respect to the timing of events.
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3:44 - 3:46Why? Because I have to consider that
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3:46 - 3:51and I have to modify what I'm saying to say, "It will rain," or "It's going to rain."
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3:51 - 3:55It's simply not permissible in English to say, "It rain tomorrow."
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3:55 - 4:00In contrast to that, that's almost exactly what you would say in Chinese.
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4:00 - 4:02A Chinese speaker can basically say something
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4:02 - 4:04that sounds very strange to an English speaker's ears.
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4:04 - 4:09They can say, "Yesterday it rain," "Now it rain," "Tomorrow it rain."
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4:09 - 4:13In some deep sense, Chinese doesn't divide up the time spectrum
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4:13 - 4:19in the same way that English forces us to constantly do in order to speak correctly.
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4:19 - 4:21Is this difference in languages
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4:21 - 4:25only between very, very distantly related languages, like English and Chinese?
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4:25 - 4:26Actually, no.
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4:26 - 4:30So many of you know, in this room, that English is a Germanic language.
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4:30 - 4:34What you may not have realized is that English is actually an outlier.
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4:34 - 4:37It is the only Germanic language that requires this.
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4:37 - 4:40For example, most other Germanic language speakers
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4:40 - 4:43feel completely comfortable talking about rain tomorrow
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4:43 - 4:45by saying, "Morgen regnet es,"
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4:45 - 4:49quite literally to an English ear, "It rain tomorrow."
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4:49 - 4:54This led me, as a behavioral economist, to an intriguing hypothesis.
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4:54 - 4:58Could how you speak about time, could how your language forces you to think about time,
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4:58 - 5:02affect your propensity to behave across time?
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5:02 - 5:05You speak English, a futured language.
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5:05 - 5:08And what that means is that every time you discuss the future,
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5:08 - 5:09or any kind of a future event,
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5:09 - 5:13grammatically you're forced to cleave that from the present
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5:13 - 5:15and treat it as if it's something viscerally different.
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5:15 - 5:18Now suppose that that visceral difference
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5:18 - 5:22makes you subtly dissociate the future from the present every time you speak.
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5:22 - 5:24If that's true and it makes the future feel
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5:24 - 5:27like something more distant and more different from the present,
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5:27 - 5:30that's going to make it harder to save.
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5:30 - 5:32If, on the other hand, you speak a futureless language,
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5:32 - 5:36the present and the future, you speak about them identically.
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5:36 - 5:39If that subtly nudges you to feel about them identically,
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5:39 - 5:41that's going to make it easier to save.
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5:41 - 5:44Now this is a fanciful theory.
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5:44 - 5:46I'm a professor, I get paid to have fanciful theories.
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5:46 - 5:51But how would you actually go about testing such a theory?
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5:51 - 5:55Well, what I did with that was to access the linguistics literature.
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5:55 - 5:59And interestingly enough, there are pockets of futureless language speakers
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5:59 - 6:01situated all over the world.
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6:01 - 6:04This is a pocket of futureless language speakers in Northern Europe.
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6:04 - 6:07Interestingly enough, when you start to crank the data,
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6:07 - 6:11these pockets of futureless language speakers all around the world
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6:11 - 6:14turn out to be, by and large, some of the world's best savers.
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6:14 - 6:17Just to give you a hint of that,
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6:17 - 6:19let's look back at that OECD graph that we were talking about.
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6:19 - 6:23What you see is that these bars are systematically taller
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6:23 - 6:25and systematically shifted to the left
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6:25 - 6:29compared to these bars which are the members of the OECD that speak futured languages.
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6:29 - 6:31What is the average difference here?
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6:31 - 6:34Five percentage points of your GDP saved per year.
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6:34 - 6:39Over 25 years that has huge long-run effects on the wealth of your nation.
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6:39 - 6:42Now while these findings are suggestive,
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6:42 - 6:44countries can be different in so many different ways
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6:44 - 6:48that it's very, very difficult sometimes to account for all of these possible differences.
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6:48 - 6:52What I'm going to show you, though, is something that I've been engaging in for a year,
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6:52 - 6:54which is trying to gather all of the largest datasets
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6:54 - 6:57that we have access to as economists,
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6:57 - 7:00and I'm going to try and strip away all of those possible differences,
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7:00 - 7:03hoping to get this relationship to break.
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7:03 - 7:08And just in summary, no matter how far I push this, I can't get it to break.
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7:08 - 7:10Let me show you how far you can do that.
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7:10 - 7:14One way to imagine that is I gather large datasets from around the world.
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7:14 - 7:18So for example, there is the Survey of Health, [Aging] and Retirement in Europe.
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7:18 - 7:22From this dataset you actually learn that retired European families
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7:22 - 7:24are extremely patient with survey takers.
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7:24 - 7:26(Laughter)
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7:26 - 7:31So imagine that you're a retired household in Belgium and someone comes to your front door.
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7:31 - 7:35"Excuse me, would you mind if I peruse your stock portfolio?
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7:35 - 7:39Do you happen to know how much your house is worth? Do you mind telling me?
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7:39 - 7:42Would you happen to have a hallway that's more than 10 meters long?
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7:42 - 7:47If you do, would you mind if I timed how long it took you to walk down that hallway?
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7:47 - 7:50Would you mind squeezing as hard as you can, in your dominant hand, this device
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7:50 - 7:52so I can measure your grip strength?
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7:52 - 7:56How about blowing into this tube so I can measure your lung capacity?"
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7:56 - 7:59The survey takes over a day.
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7:59 - 8:00(Laughter)
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8:00 - 8:04Combine that with a Demographic and Health Survey
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8:04 - 8:09collected by USAID in developing countries in Africa, for example,
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8:09 - 8:14which that survey actually can go so far as to directly measure the HIV status
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8:14 - 8:17of families living in, for example, rural Nigeria.
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8:17 - 8:19Combine that with a world value survey,
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8:19 - 8:23which measures the political opinions and, fortunately for me, the savings behaviors
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8:23 - 8:28of millions of families in hundreds of countries around the world.
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8:28 - 8:32Take all of that data, combine it, and this map is what you get.
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8:32 - 8:34What you find is nine countries around the world
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8:34 - 8:37that have significant native populations
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8:37 - 8:41which speak both futureless and futured languages.
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8:41 - 8:44And what I'm going to do is form statistical matched pairs
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8:44 - 8:50between families that are nearly identical on every dimension that I can measure,
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8:50 - 8:53and then I'm going to explore whether or not the link between language and savings holds
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8:53 - 8:57even after controlling for all of these levels.
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8:57 - 8:59What are the characteristics we can control for?
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8:59 - 9:02Well I'm going to match families on country of birth and residence,
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9:02 - 9:04the demographics -- what sex, their age --
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9:04 - 9:06their income level within their own country,
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9:06 - 9:09their educational achievement, a lot about their family structure.
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9:09 - 9:13It turns out there are six different ways to be married in Europe.
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9:13 - 9:17And most granularly, I break them down by religion
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9:17 - 9:20where there are 72 categories of religions in the world --
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9:20 - 9:22so an extreme level of granularity.
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9:22 - 9:27There are 1.4 billion different ways that a family can find itself.
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9:27 - 9:31Now effectively everything I'm going to tell you from now on
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9:31 - 9:34is only comparing these basically nearly identical families.
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9:34 - 9:36It's getting as close as possible to the thought experiment
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9:36 - 9:39of finding two families both of whom live in Brussels
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9:39 - 9:42who are identical on every single one of these dimensions,
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9:42 - 9:45but one of whom speaks Flemish and one of whom speaks French;
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9:45 - 9:48or two families that live in a rural district in Nigeria,
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9:48 - 9:52one of whom speaks Hausa and one of whom speaks Igbo.
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9:52 - 9:56Now even after all of this granular level of control,
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9:56 - 9:59do futureless language speakers seem to save more?
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9:59 - 10:03Yes, futureless language speakers, even after this level of control,
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10:03 - 10:06are 30 percent more likely to report having saved in any given year.
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10:06 - 10:08Does this have cumulative effects?
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10:08 - 10:13Yes, by the time they retire, futureless language speakers, holding constant their income,
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10:13 - 10:16are going to retire with 25 percent more in savings.
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10:16 - 10:18Can we push this data even further?
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10:18 - 10:23Yes, because I just told you, we actually collect a lot of health data as economists.
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10:23 - 10:27Now how can we think about health behaviors to think about savings?
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10:27 - 10:30Well, think about smoking, for example.
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10:30 - 10:33Smoking is in some deep sense negative savings.
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10:33 - 10:37If savings is current pain in exchange for future pleasure,
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10:37 - 10:38smoking is just the opposite.
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10:38 - 10:41It's current pleasure in exchange for future pain.
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10:41 - 10:44What we should expect then is the opposite effect.
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10:44 - 10:46And that's exactly what we find.
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10:46 - 10:50Futureless language speakers are 20 to 24 percent less likely
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10:50 - 10:53to be smoking at any given point in time compared to identical families,
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10:53 - 10:56and they're going to be 13 to 17 percent less likely
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10:56 - 10:58to be obese by the time they retire,
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10:58 - 11:01and they're going to report being 21 percent more likely
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11:01 - 11:03to have used a condom in their last sexual encounter.
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11:03 - 11:06I could go on and on with the list of differences that you can find.
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11:06 - 11:10It's almost impossible not to find a savings behavior
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11:10 - 11:13for which this strong effect isn't present.
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11:13 - 11:18My linguistics and economics colleagues at Yale and I are just starting to do this work
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11:18 - 11:23and really explore and understand the ways that these subtle nudges
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11:23 - 11:28cause us to think more or less about the future every single time we speak.
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11:28 - 11:30Ultimately, the goal,
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11:30 - 11:35once we understand how these subtle effects can change our decision making,
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11:35 - 11:38we want to be able to provide people tools
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11:38 - 11:40so that they can consciously make themselves better savers
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11:40 - 11:44and more conscious investors in their own future.
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11:44 - 11:46Thank you very much.
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11:46 - 11:52(Applause)
- Title:
- Could your language affect your ability to save money?
- Speaker:
- Keith Chen
- Description:
-
What can economists learn from linguists? Behavioral economist Keith Chen introduces a fascinating pattern from his research: that languages without a concept for the future -- "It rain tomorrow," instead of "It will rain tomorrow" -- correlate strongly with high savings rates. Read more about Chen’s explorations »
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 12:13
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