Thought-Provoking Thursday: How Language Influences Savings
Sprechen Sie Deutsch? (Do you speak German?) If you can answer yes (er, “ja”), you’re not only indicating an ability to avoid another “Ich bin ein Berliner” situation. According to new research out of Yale University, you might be better at saving money than your English-speaking friends.
Sprechen Sie Deutsch? (Do you speak German?) If you can answer yes (er, “ja”), you’re not only indicating an ability to avoid another “Ich bin ein Berliner” situation. According to new research out of Yale University, you might be better at saving money than your English-speaking friends.
In a TED Talk posted in February and in an article published in the April edition of the American Economic Review, Yale associate professor of economics Keith Chen argues that the language we speak could be undermining — or, in the more fortunate cases, bolstering — our abilities to save money. The difference in savings behavior, he says, lies in the way certain languages ask us to speak about the future.
“Languages differ in whether or not they require speakers to grammatically mark future events,” Chen writes. “For example, a German speaker predicting rain can naturally do so in the present tense, saying: ‘Morgen regnet es,’ which translates to ‘It rains tomorrow’. In contrast, English would require the use of a future marker like ‘will’ or ‘is going to’, as in: ‘It will rain tomorrow’. In this way, English requires speakers to encode a distinction between present and future events, while German does not.”
This may seem like a simple linguistic quirk, but Chen found that it translates to significant economic differences. In countries with a speaking structure similar to English — that is, where speakers are asked to make a strong distinction between the present and the future — retired households had 39 percent less in savings than households in countries with languages that don’t make such a distinction. What’s more, countries with a speaking structure similar to German (futureless, where the present and future aren’t so distinct) save five percent more of their GDP than countries with a more “futured” language.
“Saving is taxing your current self, for the benefit of your future self,” Chen explained. “I have to drive a slightly less nice car, wear slightly less nice clothes now so that my 80-year-old self is not destitute. All of these decisions we have to make, weigh our current selves versus our future self.” And in a language in which the future is not so distinct from the present, it’s much easier to put our 80-year-old selves first.
Or, as Chen put it, “the less distance you feel, the easier you’re going to find it to save.”
For critics who say that language is just a reflection of what we value (eskimos have many words for snow and all that jazz), Chen also asked families how important it is to teach thrift and savings to kids. He found that even placing a value on savings wasn’t a match for the language spoken at home.
“Saying it’s an important value increases savings by about 11 percent. The language effect increases savings by 31 percent,” he said, explaining that even in families that say saving isn’t important, language still increases savings by 31 percent. “In other words, the effect of language on savings that we’re finding appears to be the exact same size regardless of whether you say savings is an important value.”
As for native English speakers reading this and reaching for a German (or Chinese, or another futureless language) Rosetta Stone… not so fast: Chen’s research doesn’t currently extend to bilingual speakers, though he is working on ways to test people who think and speak in two languages that treat the future in different ways. However, if you’re English-speaking and looking for a way to boost your ability to save, other research has shown that visualizing your goals — literally keeping photographs as reminders — can be a big help.
Besides, a conversational grasp on Mandarin likely wouldn’t affect your ability to save, at least not in the immediate future. “You probably,” Chen said, “wouldn’t use the language enough to think it on a cognitive level.”
