Wednesday, September 11, 2013

Language and Economics: A Review of Chen's Tense and Savings Theory

Part I. What this is all about.

Several months ago, an economist and professor at UCLA, M. Keith Chen, published a paper in the American Economic Review, which argued that countries with languages that are future tense dependent (where they necessarily must speak about the future using tense) save less money. Or in simpler words, if you speak a language that talks about the future and the present in the same tense, you're more likely to save your money. English is a language that tends to invoke a future tense. You can say I will go to the bank later but not I go to the bank later.

Here is an article in The Atlantic about this.

Here is a video for non-linguists and non-economists:

Here is Chen's article (pdf warning).

Part II. Reactions.

Chen's study involved 39 languages, only nine of which were categorized as non-future tense dependent. Many of the nine have interconnected economies. More frustratingly, Chen categorizes languages based on popular consensus, not linguistic consensus. Danish and Swedish are dialects of a West Scandanavian language clade. Basque was categorized as one language when there are definitely two language divisions between east and west, and in reality there are probably about 20 Basque languages. The idea that the Basque language consists of simply different dialects is not a reflection of the current state of Basque today; two speakers of very divergent Basque dialects (read: languages) will have a much harder time communicating than a Danish and Swedish speaker.

But back to the problem of interconnected economies. Danish, Swedish, and Finnish utilize the Scandinavian economic and fiscal models while Danish and Swedish are dialects of the same language. This artificially inflates the N-sample and makes the report look statistically more significant than it should be.

Chen's characterization of language was awfully simplistic. English can say I am going to the store (later) in which case the sentence is free from a present-future distinction. Chen's paper, however, acknowledges these nuances in language but makes no attempt to distinguish them. Such a feat would be Herculean.

Some have pointed to Chen's paper and said, "Well this was true even within countries! A French speaker in Switzerland saves less than a Swiss German." While Chen did find that was true, his findings were not statistically significant, so the point is moot.

This was a surface examination of Chen's piece based on a single read-through. Subsequent reads might uncover more problems or they may justify Chen.

Part III. Last comments.

I was fairly disappointed with Jason Merchant's comment on Language Log. Merchant says,
Because Chen did not control for cultural factors though, it remains at best a supposition that language, and not the cultures of the people using them, are responsible for the savings and other behavioral differences found.
Wow. Did he read Chen's article? Control variables included legal inheritance and Family Values survey findings. You may say that the control variables were poorly chosen (what is the legal origin going to do with the savings rate?) but you can't say that he wasn't controlling for cultural factors.

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