The former residents of the German Democratic Republic exhibit a significantly less pronounced present bias when compared with former residents of the Federal Republic of Germany

Time preferences and political regimes: evidence from reunified Germany. Tim Friehe, Markus Pannenberg. Journal of Population Economics, February 11 2019. https://link.springer.com/article/10.1007/s00148-019-00728-7

Abstract: We use the separation and later reunification of Germany after World War II to show that a political regime shapes time preferences of its residents. Using two identification strategies, we find that former residents of the German Democratic Republic exhibit a significantly less pronounced present bias when compared with former residents of the Federal Republic of Germany, whereas measures of patience are statistically indistinguishable. Interpreting the years spent under the regime as a proxy for treatment intensity yields consistent results. Moreover, we present evidence showing that present bias predicts choices in the domains of health, finance, and education, thereby illustrating lasting repercussions of a regime’s influence on time preferences.

Keywords: Time preferences Political regime Germany Natural experiment SOEP