In the late 1960s and early 1970s, Stanford researchers conducted the famous “Marshmallow Experiment”, a series of studies on delayed gratification. In the tests, a child was given a choice between a marshmallow that he or she could have immediately, or two marshmallows if the child was willing to wait until the tester returned. Years down the road, the kids who had been able to wait showed higher levels of development according to different measures, suggesting a link between delayed gratification and long-term success.
In today’s markets, too many countries’ propensity to save resembles the child who can’t wait. From 1985 to 2010, Greece hasn’t been able to save more than 10% of its GDP. The other side of the coin is that countries such as Luxembourg have constantly been saving over a third of their GDP per year.
Why is it that countries have such different saving behaviors?
Behavioral economist Keith Chen from Yale suggests that there is a link between the structure of the language you speak and your propensity to save. In particular, there is a correlation between how your language forces you to speak about time and how you end up perceiving time. Let me give you an example: if you are an English or an Italian speaker, the sentence “I am eating a marshmallow now” will be very different from saying “I will eat a marshmallow tomorrow”. But if you are a Chinese or a Flemming speaker, your language will not let you to make such a distinction.
In other words, if you speak a futured language, you will end up dividing the time spectrum. Could that affect your perception of time? If your language disassociates the future from the present, it might become harder for you to save and vice versa.
This is exactly the hypothesis that Keith Chen tested. He started by identifying countries which speak both futured and futureless language to then form matched pairs of families that are nearly identical on every dimension you can measure (such as country of birth, income, family structure, religion an so on), but differ because one speaks a futured language and the other one speaks a futureless language.
Take two families living in Brussels which are identical on every single measurable dimension, but one of them speaks French and the other speaks Flemish.
Interestingly enough, families who speak Flemish (futureless) are 30% more likely to report having saved in any given year. We can push this even further and find that the accumulation of these savings becomes meaningful, as by the time they retire they have an average of 25% more in savings (holding income constant).
What can we learn from these findings? Our language forces us to perceive the future as more or less distant. This in turn makes us either more or less vulnerable to the “marshmallow effect”. Being aware of resembling either the patient child or the child who can’t wait can make a difference in how consciously we invest and save money.
The final lesson to be learned? Next time someone offers you either a marshmallow now or two marshmallows in 15 minutes, choose the second option.