How your language impacts your money saving habits
Of course someone who grew up speaking a different language would think differently and make different decisions than you, wouldn’t they? I’m convinced it’s true, although whether or not it’s solely because of language is questionable. This question has been and continues to be debated by (real, as in professional) linguists, and every now and again examples pop up to prove that it’s true. Watch this video for a recent example.
In the video you either chose to watch or chose to watch later (as it’s really interesting), Behavioral Economist Keith Chen suggests that the language you speak impacts the way you think about the future, and specifically about your money-saving habits. How is it that countries with similar economies can still have radically different savings patterns? And could language–something different between countries–possibly make a difference?
English is what Kevin called a “futured language,” meaning that it has a future tense and speaks about the future in a different way than the past and present. It separates the future in other words and makes it a separate entity. English in fact is the only Germanic language that speaks about the future this way. Believe it or not, other languages such as German and Chinese don’t differentiate time like English does. German often uses the present tense in place of the future tense, and Chinese allows someone to say (in translation):
- Yesterday it rained.
- Now it rained.
- Tomorrow it rained.
These are called “futureless languages.” The theory was that if a language speaks as if the present and the future are so different and so far away from each other time-wise, then it would make it harder to save money; whereas if the present and the future are viewed in nearly the same way, then it makes saving more likely.
After analysis and a lot of cross-tabs, the data showed that this theory was in fact true! The best savers are more closely related to futureless languages. Statistical analysis showed in Kevin’s research that “futureless language speakers are 30% more likely to save in a year,” and “retirees from futureless languages are going to have 25% more” money saved for retirement, if income is held constant.
What a contradiction this is! Countries with future languages such as the United States that are almost-obsessed with the concept of saving money for the future are actually saving less than countries that don’t even think about the future in their words (and maybe therefore in their thoughts.)
This was on an individual level, so what about on a country basis? Comparing China, Estonia and Germany to India, Greece and the UK, one major difference is savings rates. Germans save 10 percentage points more than the British (as a fraction of GDP), and Estonians and Chinese are saving 20 percentage points more than Greeks and Indians! And as we know, who’s doing better than most countries today in the difficult economic climate? The strongest economy in Europe is Germany, and worldwide we know that China is doing pretty well.
And that ladies and gentleman is what I call pure discovery!
For more examples on how language impacts our behavior, go to the article that corresponds to the video.
More from Kevin’s blog.