Does education have an impact on patience and risk willingness?

Abstract

We analyse the causal effect of education on patience (also known as time preference) and risk willingness using the German compulsory schooling reform, which took effect in West Germany after World War II. This reform increased compulsory schooling from 8 years to 9 years. We use two-stage least squares to obtain causal effects. In line with the literature, the results show a positive effect of education on risk willingness mainly for those who were the immediate partakers of the reform. Contrary to the literature, a negative effect of education on patience is found. This effect is larger as more years around the pivotal years are considered.