5 September 2022

Are time preferences passed on to the next generation?

If so, does the transmission persist or fade out as children age? How relevant is parenting as a device to counteract or strengthen the transmission of preferences from parents to children?

Anne Ardila Brenøe (University of Zurich) and Thomas Epper (CNRS & IESEG), both associated CEBI-members, answer these questions in a forthcoming article in European Economic Review.

Patient people generally experience better lifetime outcomes than their impatient peers, for instance, in terms of education, health, and earnings. If parents transmit time preferences to their children, parental patience may thus have long-term consequences for how their children fare during adulthood.

“Yet, we do not know much about the acquisition of time preferences, the transmission of these preferences across generations, and the mechanisms that are relevant for propagation from parents to children,” Anne Brenøe tells.

To study these issues, Anne Brenøe and Thomas Epper combined rich survey data on preferences, parenting values, parental time investments, and child-rearing practices with high-quality administrative data from Denmark. In their paper, they present three main results:

First, they show that there is a substantial transmission of patience from parents to children, even when measuring parent and child preferences four decades apart.

Second, the correlation coefficient between parental and offspring preferences is constant across child ages spanning from adolescence to midlife. This indicates a strong persistence of the intergenerational transmission.

Third, they show that parenting style can be used as an effective device to undo or counteract the transmission of time preferences from parents to their children. Authoritative parents, who put high weight on both demandingness (control) and responsiveness (warmth) when raising children, do not transmit patience to their offspring, while authoritarian (high control, low warmth) and permissive (low control, high warmth) parents do. Put differently, the authoritative parenting style can be considered an effective tool to foster child patience regardless of the parent's own time preferences. “Regardless of whether the transmission is due to genetics and/or socialization, we see that parenting style can reduce the strength of the transmission,” Anne Brenøe explains.
At the same time, they do not find heterogeneity in the intergenerational transmission of time preferences by parental involvement at the aggregate level. However, when investigating the transmission conditional on parent and child gender, they find that the aggregate results mask some important heterogeneity. In particular, the transmission is strongest in same-gender parent-child dyads and involvement becomes a relevant channel when focusing on mothers and fathers separately.

Anne Brenøe concludes, “taken together, our results suggest that how parents interact with their children is a key moderator of the preference transmission and it is at least as important if not more important than how often they do so.

You can read the full research paper, Parenting Values and the Intergenerational Transmission of Time Preferences, published in European Economic Review, here