RIEB, Kobe University

Inequalities and Patience for Tomorrow

This paper examines how impatience interacts with inequalities in economic devel- opment. In a society of intrinsic inequality, we show that (i) poor households tend to bene…t more from positive shocks under decreasing marginal impatience (DMI) than un- der constant marginal impatience (CMI) and increasing marginal impatience (IMI); (ii) an unequal society may be preferable for poor households under DMI; (iii) urbanization can increase the income inequality, while raising overall welfare; (iv) under DMI even if all households are allowed to own assets, with di¤erent initial asset holdings, the economy will not converge to the steady state where everybody is a capitalist.