Abstract:
This paper identifies adolescence as a formative period in the development of time preferences. Using data from 80,000 individuals in 76 countries, I exploit within-country, crosscohort variation in exposure to aggregate instability-natural disasters, inflation crises, and sovereign defaults. Instability experienced between ages 13 and 17 reduces long-run patience, whereas comparable shocks experienced before or after this developmental stage show no detectable effects. Evidence from second-generation immigrants in Germany reveals similar age-specific effects when origin-country instability is transmitted only indirectly through family networks, suggesting that the mechanism operates through psychological rather than material channels.
