It is a popular rhetoric tool among politicians in Hungary to build on the ’national character’ of Hungarians. Does such a concept really exist? A German research team consisting of economists published their study comparing 76 countries, concerning the individual and societal preferences in correlation with the economy. We will reveal how Hungarians relate to the world in patience and risk-taking. We are exceptional in both cases, but this is not necessarily a good thing. – Index.hu wrote.
The original version can be read on Index.hu. The authors of the Defacto are all economists. One of the main theories about economics is that one’s individual decisions are more or less determined by one’s stable preferences that are part of one’s personality. Two major factors are the time preference (how patient you are) and the risk preference (how much risks you are willing to take).
To understand time preference, imagine the following decision-making scenario: we either get 310€ today or 310€ and a bonus exactly 12 months later (both choices are certain). What is the minimum bonus to chose the second? The lower the threshold is, the more patient we are. There is also a standard formula for quantifying risk preference.
Naturally, both the time and risk preferences are mainly depending on individual traits (sex, age, cognitive skills), but there are big differences between countries as well. This is well represented in the first graph.
In the vertical axis of the graph, the values of European countries are ranked.
It is evident that Hungary is on the left side of both distribution, in other words, compared to other European countries, people in Hungary are significantly more impatient and risk-avoiders. But we get a similar picture in a wider comparison.
Concerning the world’s countries, only Georgian, Rwandan and Nicaraguan people are more impatient than Hungary is,
while most patient people live in Sweden, the Netherlands, and the US. Our relation to risk-taking is also extreme, although Portugal is the least risk-taking, with
Hungary being fourth place, we are almost among the very top. The record holders of risk-taking are South Africa, Botswana, and Saudi Arabia.
Are these only little colourful scraps of information, or do these preferences have a deeper impact on economic decisions? Although these studies are in their infancy, it seems like it is the latter. Being patient, for example, does not only mean that you can wait longer in line, but that you are willing to make sacrifices now for a higher quality of life later.
There are several other studies that show that the more patient people are, the higher education they achieve and their willingness to save money is also higher.
This future-oriented attitude can have a great impact on the advancement of the economy of a given country. The second graph illustrates this. On the horizontal axis, the degree of patience is shown and on the vertical axis, the index of wage per person is shown.
But isn’t it because the more wealthy countries or individuals can afford to make more patient decisions? It is largely refuted by the fact that the level of education and the wage is related to patience in children and teenagers. Besides, this correlation is also present when we take into account the effects of other factors on advancement and patience.
How much people are willing to take risks has also a deeper economic significance beyond itself. This factor shows a correlation between the willingness to enterprise and with the productivity of a country.
According to Defacto, economic policymakers should take these studies into account when establishing the country’s institutional environment in order to balance out the less advantageous societal attitudes.
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