The Patient Risk-Taker: Understanding the Drivers of Wealth and Inequality Across Countries

Abstract: While economic inequality has been a topic of interest to researchers for decades, most literature is focused on inequality and its evolution in single country analyses, with very little research done on drivers of wealth inequality across countries. This paper documents an association between variations in country-level patience and risk preferences from experiments involving thousands of individuals from 76 countries, and cross-sectional wealth and wealth inequality measures. We find that patience is positively correlated with average wealth. Our results also suggest that patience is associated with a decrease in wealth inequality while risk-taking is associated with an increase in wealth inequality. These associations exist through the wealth distribution and are robust to the empirical specification and a set of controls. We also find that financial development is a driving channel of the observed association between the preferences and wealth.