The reason Americans aren’t saving enough may be that we don’t speak the “right” language.
Research by UCLA behavioral economist Keith Chen suggests that there’s a link, and perhaps even a causal link, between a speaker’s language and his or her propensity to save.
Chen points out that languages with “obligatory future-time reference” lead their speakers to engage in less future-oriented behavior. As Vanguard’s Andy Clarke explains, some languages (including English) make a grammatical distinction between the present and the future.
So, when you’re talking about today’s weather, you say, “It’s raining today.” On the other hand, if you’re talking about future weather, you’d change tense, and say something like, “It will rain tomorrow.” Linguists categorize English and languages with similar treatment of tenses as strong future-time reference (“strong-FTR”) languages.
On the other hand, so-called weak-FTR languages such as Estonian, German and Chinese make weaker demarcations between the present and the future. Chen notes that the German phrase, “Morgen regnet es” is written in the present tense, but it means, “It will rain tomorrow.”
Chen finds that those who speak weak-FTR languages are more likely to save and, on average, accumulate more wealth for retirement than those who speak strong-FTR languages. And he finds evidence of this link with savings on multiple levels, including an individual’s propensity to save, long-run effects on retirement wealth, and in national savings rates. He also notes that these findings extend to health behaviors ranging from smoking to condom use, as well as to measures of long-run health. Moreover, all of these results hold up even after comparing only individuals who are identical in numerous ways and were born and raised in the same country.
Chen does offer one cautionary note: that the language might be reflecting, rather than influencing, such behaviors. While he acknowledges that the propensity to save is influenced by economic and demographic variables (such as income and education), he notes that cultural values also influence the tendency to save. He observes that self-reported measures of savings as a cultural value appear to drive savings behavior, “yet are completely uncorrelated with the effect of language on savings.”
Still, even after accounting for these variables, Chen finds that a language’s grammatical treatment of the present and future has an effect on savings behavior.
In other words, a linguistic blurring of the lines between the present and the future seems to make individuals more likely to save now for “then.” For advisors, the challenge may lie in helping retirement savers understand that that future is closer to the present than they may think.
