Keith Chen: Could your language affect your ability to save money?

The global financial crisis has sparked renewed interest in understanding why countries with similar economies exhibit vastly different savings behaviors. Despite significant research, a new hypothesis suggests that the structure of one's language may influence saving tendencies. For instance, OECD nations show stark contrasts in their savings rates; while some save over 30% of GDP annually, Greece struggles to exceed 10%. This raises intriguing questions about the relationship between linguistic structures and economic behavior.

The Chinese language shapes the way individuals think about family by requiring specific details in communication. For instance, when introducing an uncle, Mandarin necessitates clarifying whether he is from the maternal or paternal side and if he is related by blood or marriage. Additionally, it demands information regarding his age relative to one's father. This linguistic structure compels speakers to convey a richer context about familial relationships that English does not require.

Language shapes our perception of time, with English requiring specific grammatical structures to indicate past, present, and future events. For instance, one must say "It rained yesterday," "It is raining now," or "It will rain tomorrow" in English. In contrast, Chinese allows for simpler expressions like "Yesterday it rain" without the need for tense modification. This difference isn't limited to unrelated languages; even within Germanic languages where English stands out as an exception by enforcing strict temporal distinctions that others do not.

Speaking a futured language like English creates a psychological separation between the present and future, making it harder to save money. In contrast, speakers of futureless languages perceive the present and future similarly, which may encourage better saving habits. Research indicates that pockets of these speakers around the world tend to be among the best savers. Data shows significant differences in savings rates; countries with futureless languages save an average of five percentage points more GDP annually compared to those speaking futured languages.

Language Influences Savings Behavior Gathering extensive datasets reveals that despite numerous variables, the relationship between language and savings remains intact. By analyzing data from various surveys across Europe and Africa, a comparison is made between families speaking futureless languages versus those who do not. Even after controlling for demographics such as income, education level, and family structure—down to granular details like religion—futureless language speakers consistently demonstrate higher saving rates.

Health Behaviors Correlate with Financial Outcomes Futureless language speakers are 30% more likely to report annual savings compared to their counterparts by retirement age; they accumulate 25% more in total savings while also exhibiting healthier behaviors. They smoke less (20-24%), have lower obesity rates (13-17%), and show increased responsible health practices like condom use during sexual encounters (21%). These findings suggest a profound link between linguistic structures influencing long-term financial planning and overall well-being.

Research at Yale is focused on understanding how subtle linguistic nudges influence our thinking about the future. By exploring these effects, the aim is to develop tools that empower individuals to become better savers and more mindful investors in their futures.