If the blog offered you a choice between taking $3400 today, or waiting a month to receive $3800, what would you choose?
This was the question posed to 5900 economics students from 45 different countries in a novel experiment by the Swiss Finance Institute. And they got significantly different answers.
As the chart shows, only 8% of Nigerian students chose to wait, compared to 89% of Germans. The authors suggest these differences are based on cultural preferences, as the implied interest rate for waiting a month is nearly 12% – far above any market level.
The authors also grouped the responses into 4 cultural clusters:
• Germanic-Nordic; 88% chose to wait
• Anglo-Saxon, Middle East and Asia; 66% – 70% would wait
• E Europe, Latin America and Latin Europe; 52% – 59% would wait
• Africa; only 34% would wait
Of course, there is no ‘right’ or ‘wrong’ answer to the question. But interestingly, the researchers didn’t find any major differences by age or gender, although older respondees tended to be more patient.
The researchers conclude that cultures with a higher ‘patience’ level are more comfortable in undertaking long-term research and innovation. They also appear to have greater interest in measures to increase sustainability.
Equally, of course, the study’s conclusions may also be helpful for commercial and finance professionals, when they come to formulate proposals for buyers operating in different parts of the world.