Patience cycles

Abstract

<div lang="en" class="abs"><p class="abs_header">Abstract</p><p>There is a large body of evidence supporting the notion that a) those who grow up to be patient (forward-looking) do better in life compared to those who do not, and b) parents can inculcate the virtue of delayed gratification in their children by taking the right sort of actions. We study a dynamic model in which parents, for selfish reasons, invest resources to raise patient children. Patience raises the marginal return to human capital accumulation. The patient young do better in school, and hence, get more education but scrimp on investing in their own progeny’s patience. This dynamic can generate intergenerational patience cycles. Generations coming of age with little patience invest more in the productive capacity of their children, while those with greater patience invest more in their own productive capacity.</p></div>