(888) 234-7982

No, the title of this blog is not a typo.  It’s an example of a not so subtle difference between futured and futureless languages.  Keith Chen is a professor in behavioral economics at the Anderson School of Management at UCLA.  More importantly to his work, perhaps, is his upbringing as an American of Chinese descent, growing up in the Midwest speaking both English and Mandarin on a daily basis.

He started noticing differences in how the two languages operated early on in life.  The example he gives in his TED Talk which has received nearly 1.5 million views is how he might introduce his uncle.  “This is my uncle,” would work just fine in English.  In Mandarin, he would have to explain, in detail, whether his uncle from on his mother or father’s side, by marriage or blood, whether he was older or younger than his parents, etc.

In his life as a behavioral economist, his work often revolves around determining why groups or individuals behave a certain way with their money or other finite resources.  When studying the countries that make up the Organization of Economic Cooperation & Development (OECD), effectively the world’s wealthiest nations, he became curious as to why aside from these countries sharing so many economic similarities, their savings rates were so different.  Could it be that something as simple as language has a dramatic impact on how we prepare and save for our future?

The bottom line is, yes, it has a huge impact in every possible way that Eric and his colleagues have dissected this phenomenon.  In English, for example, we have to think constantly about the spectrum of time.  When discussing the weather, we have to clearly define, “It rained yesterday,” “It is raining now,” or “It will rain tomorrow.”  In futureless languages, like Mandarin, most Germanic languages and others, it’s perfectly acceptable to say, “Yesterday it rain,” “Now it rain,” or “Tomorrow it rain.”  This difference is whether you think about the past, present and future identically or being forced to be constantly aware of their differences due to how you speak.

Chen’s research is tough to argue against.  Savings rates in future language countries, like the U.S., U.K. and Greece pale in comparison to futureless countries like Norway, Finland, Japan and Austria.  The average difference equates to 5% of GDP per year.  As Chen points out, over 25 years the impact on the wealth of a nation could be huge.  Futureless speakers are 30% more likely to report savings in any given year.  All else equal, they’ll retire with 25% more in savings.  Similar statistics exist when it comes to smoking, obesity and other health issues where pleasure today is exchanged for future pain.

Chen’s speech is from 2012 and this research is still in its infancy.  There are no easy answers as to how to improve our behavior as a result, though he and others are working everyday to provide people with tools to help them save and invest regardless of cognitive bias.  That said, I found the lesson fascinating and, as with most studies go with how our brains interact (or interfere) with financial decisions, a little awareness can go a long way in helping to build better habits.

Have a great week!