Does language shape economic behavior?: A study of pension planning and financial wealth of immigrants in the Netherlands

Recent studies suggest that one characteristic of a language, future-time-reference (FTR), can have strong effects on how people think and make (economic) decisions. For instance, languages with no explicit distinction between future and present tense (weak-FTR languages, e.g., Dutch) make people more forward looking (Chen, 2013). Building on this idea and using survey data, this paper will examine (1) differences in pension planning and financial wealth among native Dutch and groups of immigrants with different home languages; (2) the relation between immigrants’ Dutch proficiency and their pension planning and financial wealth. Empirical results show that immigrants who speak non-weak-FTR (i.e., strong-FTR) home languages think less about their retirement, are less likely to own and tend to own less financial wealth than immigrants who speak weak-FTR home languages and native Dutch. Furthermore, for immigrants who speak strong-FTR home languages, there is a significant positive effect of (weak-FTR) Dutch proficiency on their retirement planning. For immigrants who speak weak-FTR home languages, there is no significant effect of Dutch proficiency on their retirement planning. The paper helps to understand pension planning and decisions on financial wealth of Dutch natives and immigrants from different linguistic backgrounds, with an implication for the pension communication and contributions to the debate on whether language shapes thought in the field of linguistics and psychology.