WEBVTT 00:00:00.500 --> 00:00:05.000 The global economic financial crisis has reignited public interest 00:00:05.000 --> 00:00:08.416 in something that's actually one of the oldest questions in economics, 00:00:08.416 --> 00:00:11.100 dating back to at least before Adam Smith. 00:00:11.100 --> 00:00:16.584 And that is, why is it that countries with seemingly similar economies and institutions 00:00:16.584 --> 00:00:19.833 can display radically different savings behavior? NOTE Paragraph 00:00:19.833 --> 00:00:24.367 Now, many brilliant economists have spent their entire lives working on this question, 00:00:24.367 --> 00:00:27.784 and as a field we've made a tremendous amount of headway 00:00:27.784 --> 00:00:30.217 and we understand a lot about this. 00:00:30.217 --> 00:00:33.851 What I'm here to talk with you about today is an intriguing new hypothesis 00:00:33.851 --> 00:00:37.883 and some surprisingly powerful new findings that I've been working on 00:00:37.883 --> 00:00:42.589 about the link between the structure of the language you speak 00:00:42.604 --> 00:00:47.000 and how you find yourself with the propensity to save. 00:00:47.000 --> 00:00:50.067 Let me tell you a little bit about savings rates, a little bit about language, 00:00:50.067 --> 00:00:52.417 and then I'll draw that connection. NOTE Paragraph 00:00:52.417 --> 00:00:56.984 Let's start by thinking about the member countries of the OECD, 00:00:56.984 --> 00:01:00.285 or the Organization of Economic Cooperation and Development. 00:01:00.285 --> 00:01:04.184 OECD countries, by and large, you should think about these 00:01:04.184 --> 00:01:06.822 as the richest, most industrialized countries in the world. 00:01:06.822 --> 00:01:10.872 And by joining the OECD, they were affirming a common commitment 00:01:10.872 --> 00:01:14.310 to democracy, open markets and free trade. 00:01:14.310 --> 00:01:18.995 Despite all of these similarities, we see huge differences in savings behavior. NOTE Paragraph 00:01:18.995 --> 00:01:21.445 So all the way over on the left of this graph, 00:01:21.445 --> 00:01:26.179 what you see is many OECD countries saving over a quarter of their GDP every year, 00:01:26.179 --> 00:01:30.860 and some OECD countries saving over a third of their GDP per year. 00:01:30.860 --> 00:01:35.628 Holding down the right flank of the OECD, all the way on the other side, is Greece. 00:01:35.628 --> 00:01:39.044 And what you can see is that over the last 25 years, 00:01:39.044 --> 00:01:42.944 Greece has barely managed to save more than 10 percent of their GDP. 00:01:42.944 --> 00:01:49.818 It should be noted, of course, that the United States and the U.K. are the next in line. NOTE Paragraph 00:01:49.818 --> 00:01:52.396 Now that we see these huge differences in savings rates, 00:01:52.396 --> 00:01:56.062 how is it possible that language might have something to do with these differences? 00:01:56.062 --> 00:01:59.111 Let me tell you a little bit about how languages fundamentally differ. 00:01:59.111 --> 00:02:04.678 Linguists and cognitive scientists have been exploring this question for many years now. 00:02:04.678 --> 00:02:09.288 And then I'll draw the connection between these two behaviors. NOTE Paragraph 00:02:09.288 --> 00:02:11.896 Many of you have probably already noticed that I'm Chinese. 00:02:11.896 --> 00:02:14.861 I grew up in the Midwest of the United States. 00:02:14.861 --> 00:02:17.312 And something I realized quite early on 00:02:17.312 --> 00:02:20.903 was that the Chinese language forced me to speak about and -- 00:02:20.903 --> 00:02:23.794 in fact, more fundamentally than that -- 00:02:23.794 --> 00:02:27.884 ever so slightly forced me to think about family in very different ways. NOTE Paragraph 00:02:27.884 --> 00:02:29.961 Now, how might that be? Let me give you an example. 00:02:29.961 --> 00:02:34.363 Suppose I were talking with you and I was introducing you to my uncle. 00:02:34.363 --> 00:02:37.229 You understood exactly what I just said in English. 00:02:37.229 --> 00:02:40.179 If we were speaking Mandarin Chinese with each other, though, 00:02:40.179 --> 00:02:42.245 I wouldn't have that luxury. 00:02:42.245 --> 00:02:45.078 I wouldn't have been able to convey so little information. 00:02:45.078 --> 00:02:47.462 What my language would have forced me to do, 00:02:47.462 --> 00:02:49.462 instead of just telling you, "This is my uncle," 00:02:49.462 --> 00:02:52.744 is to tell you a tremendous amount of additional information. 00:02:52.744 --> 00:02:54.563 My language would force me to tell you 00:02:54.563 --> 00:02:57.979 whether or not this was an uncle on my mother's side or my father's side, 00:02:57.979 --> 00:03:01.063 whether this was an uncle by marriage or by birth, 00:03:01.063 --> 00:03:03.295 and if this man was my father's brother, 00:03:03.295 --> 00:03:06.079 whether he was older than or younger than my father. 00:03:06.079 --> 00:03:10.212 All of this information is obligatory. Chinese doesn't let me ignore it. 00:03:10.212 --> 00:03:12.378 And in fact, if I want to speak correctly, 00:03:12.378 --> 00:03:15.495 Chinese forces me to constantly think about it. NOTE Paragraph 00:03:15.495 --> 00:03:19.444 Now, that fascinated me endlessly as a child, 00:03:19.444 --> 00:03:22.679 but what fascinates me even more today as an economist 00:03:22.679 --> 00:03:27.980 is that some of these same differences carry through to how languages speak about time. 00:03:27.980 --> 00:03:32.229 So for example, if I'm speaking in English, I have to speak grammatically differently 00:03:32.229 --> 00:03:34.962 if I'm talking about past rain, "It rained yesterday," 00:03:34.962 --> 00:03:37.194 current rain, "It is raining now," 00:03:37.194 --> 00:03:39.628 or future rain, "It will rain tomorrow." 00:03:39.628 --> 00:03:44.455 Notice that English requires a lot more information with respect to the timing of events. 00:03:44.455 --> 00:03:46.462 Why? Because I have to consider that 00:03:46.462 --> 00:03:51.245 and I have to modify what I'm saying to say, "It will rain," or "It's going to rain." 00:03:51.245 --> 00:03:55.361 It's simply not permissible in English to say, "It rain tomorrow." NOTE Paragraph 00:03:55.361 --> 00:03:59.545 In contrast to that, that's almost exactly what you would say in Chinese. 00:03:59.545 --> 00:04:01.861 A Chinese speaker can basically say something 00:04:01.861 --> 00:04:04.445 that sounds very strange to an English speaker's ears. 00:04:04.445 --> 00:04:09.012 They can say, "Yesterday it rain," "Now it rain," "Tomorrow it rain." 00:04:09.012 --> 00:04:12.875 In some deep sense, Chinese doesn't divide up the time spectrum 00:04:12.875 --> 00:04:19.308 in the same way that English forces us to constantly do in order to speak correctly. NOTE Paragraph 00:04:19.308 --> 00:04:20.892 Is this difference in languages 00:04:20.892 --> 00:04:25.087 only between very, very distantly related languages, like English and Chinese? 00:04:25.087 --> 00:04:26.045 Actually, no. 00:04:26.045 --> 00:04:29.778 So many of you know, in this room, that English is a Germanic language. 00:04:29.778 --> 00:04:33.693 What you may not have realized is that English is actually an outlier. 00:04:33.693 --> 00:04:36.943 It is the only Germanic language that requires this. 00:04:36.943 --> 00:04:39.827 For example, most other Germanic language speakers 00:04:39.827 --> 00:04:42.844 feel completely comfortable talking about rain tomorrow 00:04:42.844 --> 00:04:44.810 by saying, "Morgen regnet es," 00:04:44.810 --> 00:04:48.710 quite literally to an English ear, "It rain tomorrow." NOTE Paragraph 00:04:48.710 --> 00:04:53.777 This led me, as a behavioral economist, to an intriguing hypothesis. 00:04:53.777 --> 00:04:58.026 Could how you speak about time, could how your language forces you to think about time, 00:04:58.026 --> 00:05:01.777 affect your propensity to behave across time? 00:05:01.777 --> 00:05:04.677 You speak English, a futured language. 00:05:04.677 --> 00:05:07.844 And what that means is that every time you discuss the future, 00:05:07.844 --> 00:05:09.411 or any kind of a future event, 00:05:09.411 --> 00:05:12.810 grammatically you're forced to cleave that from the present 00:05:12.810 --> 00:05:15.443 and treat it as if it's something viscerally different. 00:05:15.443 --> 00:05:17.943 Now suppose that that visceral difference 00:05:17.943 --> 00:05:22.143 makes you subtly dissociate the future from the present every time you speak. 00:05:22.143 --> 00:05:24.056 If that's true and it makes the future feel 00:05:24.056 --> 00:05:27.039 like something more distant and more different from the present, 00:05:27.039 --> 00:05:29.693 that's going to make it harder to save. 00:05:29.693 --> 00:05:32.244 If, on the other hand, you speak a futureless language, 00:05:32.244 --> 00:05:35.627 the present and the future, you speak about them identically. 00:05:35.627 --> 00:05:38.610 If that subtly nudges you to feel about them identically, 00:05:38.610 --> 00:05:40.994 that's going to make it easier to save. NOTE Paragraph 00:05:40.994 --> 00:05:43.544 Now this is a fanciful theory. 00:05:43.544 --> 00:05:46.444 I'm a professor, I get paid to have fanciful theories. 00:05:46.444 --> 00:05:50.678 But how would you actually go about testing such a theory? 00:05:50.678 --> 00:05:54.744 Well, what I did with that was to access the linguistics literature. 00:05:54.744 --> 00:05:59.127 And interestingly enough, there are pockets of futureless language speakers 00:05:59.127 --> 00:06:01.060 situated all over the world. 00:06:01.060 --> 00:06:04.426 This is a pocket of futureless language speakers in Northern Europe. 00:06:04.426 --> 00:06:07.327 Interestingly enough, when you start to crank the data, 00:06:07.327 --> 00:06:10.560 these pockets of futureless language speakers all around the world 00:06:10.560 --> 00:06:14.494 turn out to be, by and large, some of the world's best savers. NOTE Paragraph 00:06:14.494 --> 00:06:16.660 Just to give you a hint of that, 00:06:16.660 --> 00:06:19.410 let's look back at that OECD graph that we were talking about. 00:06:19.410 --> 00:06:22.794 What you see is that these bars are systematically taller 00:06:22.794 --> 00:06:24.926 and systematically shifted to the left 00:06:24.926 --> 00:06:29.444 compared to these bars which are the members of the OECD that speak futured languages. 00:06:29.444 --> 00:06:30.907 What is the average difference here? 00:06:30.907 --> 00:06:34.193 Five percentage points of your GDP saved per year. 00:06:34.193 --> 00:06:38.927 Over 25 years that has huge long-run effects on the wealth of your nation. NOTE Paragraph 00:06:38.927 --> 00:06:41.627 Now while these findings are suggestive, 00:06:41.627 --> 00:06:43.693 countries can be different in so many different ways 00:06:43.693 --> 00:06:48.077 that it's very, very difficult sometimes to account for all of these possible differences. 00:06:48.077 --> 00:06:52.109 What I'm going to show you, though, is something that I've been engaging in for a year, 00:06:52.109 --> 00:06:54.432 which is trying to gather all of the largest datasets 00:06:54.432 --> 00:06:56.724 that we have access to as economists, 00:06:56.724 --> 00:07:00.106 and I'm going to try and strip away all of those possible differences, 00:07:00.106 --> 00:07:02.760 hoping to get this relationship to break. 00:07:02.760 --> 00:07:07.791 And just in summary, no matter how far I push this, I can't get it to break. 00:07:07.791 --> 00:07:09.556 Let me show you how far you can do that. NOTE Paragraph 00:07:09.556 --> 00:07:14.189 One way to imagine that is I gather large datasets from around the world. 00:07:14.189 --> 00:07:17.923 So for example, there is the Survey of Health, [Aging] and Retirement in Europe. 00:07:17.923 --> 00:07:21.757 From this dataset you actually learn that retired European families 00:07:21.757 --> 00:07:24.390 are extremely patient with survey takers. 00:07:24.390 --> 00:07:26.306 (Laughter) 00:07:26.306 --> 00:07:30.690 So imagine that you're a retired household in Belgium and someone comes to your front door. 00:07:30.690 --> 00:07:35.274 "Excuse me, would you mind if I peruse your stock portfolio? 00:07:35.274 --> 00:07:38.806 Do you happen to know how much your house is worth? Do you mind telling me? 00:07:38.806 --> 00:07:42.073 Would you happen to have a hallway that's more than 10 meters long? 00:07:42.073 --> 00:07:46.574 If you do, would you mind if I timed how long it took you to walk down that hallway? 00:07:46.574 --> 00:07:50.471 Would you mind squeezing as hard as you can, in your dominant hand, this device 00:07:50.471 --> 00:07:51.983 so I can measure your grip strength? 00:07:51.983 --> 00:07:56.006 How about blowing into this tube so I can measure your lung capacity?" 00:07:56.006 --> 00:07:58.890 The survey takes over a day. 00:07:58.890 --> 00:08:00.373 (Laughter) 00:08:00.373 --> 00:08:04.273 Combine that with a Demographic and Health Survey 00:08:04.273 --> 00:08:08.723 collected by USAID in developing countries in Africa, for example, 00:08:08.723 --> 00:08:13.874 which that survey actually can go so far as to directly measure the HIV status 00:08:13.874 --> 00:08:16.973 of families living in, for example, rural Nigeria. 00:08:16.973 --> 00:08:18.874 Combine that with a world value survey, 00:08:18.874 --> 00:08:23.307 which measures the political opinions and, fortunately for me, the savings behaviors 00:08:23.307 --> 00:08:28.006 of millions of families in hundreds of countries around the world. NOTE Paragraph 00:08:28.006 --> 00:08:31.824 Take all of that data, combine it, and this map is what you get. 00:08:31.824 --> 00:08:34.074 What you find is nine countries around the world 00:08:34.074 --> 00:08:36.726 that have significant native populations 00:08:36.726 --> 00:08:40.773 which speak both futureless and futured languages. 00:08:40.773 --> 00:08:44.307 And what I'm going to do is form statistical matched pairs 00:08:44.307 --> 00:08:49.900 between families that are nearly identical on every dimension that I can measure, 00:08:49.900 --> 00:08:53.437 and then I'm going to explore whether or not the link between language and savings holds 00:08:53.437 --> 00:08:56.920 even after controlling for all of these levels. NOTE Paragraph 00:08:56.920 --> 00:08:59.137 What are the characteristics we can control for? 00:08:59.137 --> 00:09:01.901 Well I'm going to match families on country of birth and residence, 00:09:01.901 --> 00:09:04.303 the demographics -- what sex, their age -- 00:09:04.303 --> 00:09:06.437 their income level within their own country, 00:09:06.437 --> 00:09:09.452 their educational achievement, a lot about their family structure. 00:09:09.452 --> 00:09:12.970 It turns out there are six different ways to be married in Europe. 00:09:12.970 --> 00:09:17.170 And most granularly, I break them down by religion 00:09:17.170 --> 00:09:20.485 where there are 72 categories of religions in the world -- 00:09:20.485 --> 00:09:22.202 so an extreme level of granularity. 00:09:22.202 --> 00:09:26.735 There are 1.4 billion different ways that a family can find itself. NOTE Paragraph 00:09:26.735 --> 00:09:30.784 Now effectively everything I'm going to tell you from now on 00:09:30.784 --> 00:09:33.834 is only comparing these basically nearly identical families. 00:09:33.834 --> 00:09:36.334 It's getting as close as possible to the thought experiment 00:09:36.334 --> 00:09:39.267 of finding two families both of whom live in Brussels 00:09:39.267 --> 00:09:42.267 who are identical on every single one of these dimensions, 00:09:42.267 --> 00:09:45.383 but one of whom speaks Flemish and one of whom speaks French; 00:09:45.383 --> 00:09:48.100 or two families that live in a rural district in Nigeria, 00:09:48.100 --> 00:09:51.933 one of whom speaks Hausa and one of whom speaks Igbo. NOTE Paragraph 00:09:51.933 --> 00:09:55.817 Now even after all of this granular level of control, 00:09:55.817 --> 00:09:58.983 do futureless language speakers seem to save more? 00:09:58.983 --> 00:10:02.636 Yes, futureless language speakers, even after this level of control, 00:10:02.636 --> 00:10:06.334 are 30 percent more likely to report having saved in any given year. 00:10:06.334 --> 00:10:08.150 Does this have cumulative effects? 00:10:08.150 --> 00:10:12.570 Yes, by the time they retire, futureless language speakers, holding constant their income, 00:10:12.570 --> 00:10:15.638 are going to retire with 25 percent more in savings. NOTE Paragraph 00:10:15.638 --> 00:10:18.119 Can we push this data even further? 00:10:18.119 --> 00:10:23.418 Yes, because I just told you, we actually collect a lot of health data as economists. 00:10:23.418 --> 00:10:27.301 Now how can we think about health behaviors to think about savings? 00:10:27.301 --> 00:10:30.134 Well, think about smoking, for example. 00:10:30.134 --> 00:10:33.317 Smoking is in some deep sense negative savings. 00:10:33.317 --> 00:10:36.983 If savings is current pain in exchange for future pleasure, 00:10:36.983 --> 00:10:38.291 smoking is just the opposite. 00:10:38.291 --> 00:10:41.150 It's current pleasure in exchange for future pain. 00:10:41.150 --> 00:10:44.100 What we should expect then is the opposite effect. 00:10:44.100 --> 00:10:45.868 And that's exactly what we find. 00:10:45.868 --> 00:10:49.635 Futureless language speakers are 20 to 24 percent less likely 00:10:49.635 --> 00:10:53.050 to be smoking at any given point in time compared to identical families, 00:10:53.050 --> 00:10:55.951 and they're going to be 13 to 17 percent less likely 00:10:55.951 --> 00:10:58.168 to be obese by the time they retire, 00:10:58.168 --> 00:11:00.631 and they're going to report being 21 percent more likely 00:11:00.631 --> 00:11:02.918 to have used a condom in their last sexual encounter. 00:11:02.918 --> 00:11:06.401 I could go on and on with the list of differences that you can find. 00:11:06.401 --> 00:11:10.201 It's almost impossible not to find a savings behavior 00:11:10.201 --> 00:11:12.800 for which this strong effect isn't present. NOTE Paragraph 00:11:12.800 --> 00:11:17.550 My linguistics and economics colleagues at Yale and I are just starting to do this work 00:11:17.550 --> 00:11:22.717 and really explore and understand the ways that these subtle nudges 00:11:22.717 --> 00:11:28.112 cause us to think more or less about the future every single time we speak. 00:11:28.112 --> 00:11:30.413 Ultimately, the goal, 00:11:30.413 --> 00:11:34.612 once we understand how these subtle effects can change our decision making, 00:11:34.612 --> 00:11:37.562 we want to be able to provide people tools 00:11:37.562 --> 00:11:40.370 so that they can consciously make themselves better savers 00:11:40.370 --> 00:11:43.629 and more conscious investors in their own future. NOTE Paragraph 00:11:43.629 --> 00:11:45.896 Thank you very much. NOTE Paragraph 00:11:45.896 --> 00:11:52.264 (Applause)