10.05.2025 New Study Reveals How Oil Wealth Erodes Patience Through Weak Governance

A study by Prof. Mohammad Reza Farzanegan uncovers how reliance on oil revenues reduces patience in individuals, with weakened governance as the key mediator. Published in Applied Economics Letters, the research highlights a new dimension of the resource curse, showing how oil wealth fosters instability, undermining long-term economic behaviors.

Marburg, Germany – May 10, 2025 – The Economics of the Middle East Research Group at the Center for Near and Middle Eastern Studies (CNMS) is pleased to announce the publication of a new study by Prof. Mohammad Reza Farzanegan. Titled “How do oil rents undermine patience? The role of governance,” the study appears online in the Applied Economics Letters and sheds light on a previously unexplored aspect of the oil curse.

Unveiling the Behavioral Impact of Oil Wealth
Oil-dependent economies often face slower growth, a phenomenon known as the resource curse. While previous research has explored economic and political factors like corruption and conflict, Prof. Farzanegan’s study takes a novel approach by examining the behavioral consequences of oil wealth. Using data from the Global Preference Survey covering 76 countries, the research demonstrates that higher oil revenue dependency is linked to lower levels of patience—a trait closely tied to economic growth through savings, investment, and productivity.

Governance as the Critical Link
The study employs structural equation modeling to reveal that the negative effect of oil rents on patience is fully mediated by the quality of governance. Oil wealth tends to weaken institutions, fostering corruption and economic uncertainty. This instability shortens individuals’ time horizons, reducing their willingness to prioritize long-term gains over immediate rewards. Specifically, a one-standard-deviation increase in oil rents reduces governance quality by 0.35 standard deviations, while a one-standard-deviation improvement in governance boosts patience by 0.73 standard deviations.

Policy Implications for Oil-Rich Economies
Prof. Farzanegan’s findings suggest actionable reforms for oil-rich nations. Enhancing transparency in oil revenue management, strengthening anti-corruption agencies, and establishing sovereign wealth funds for long-term investments in education and health can mitigate the adverse effects of oil wealth. These steps could foster public trust and encourage patience, supporting sustainable economic development.

A New Perspective on the Resource Curse
“This study highlights how oil wealth doesn’t just affect economies but also shapes individual behaviors,” said Prof. Farzanegan. “By weakening governance, oil rents erode patience, which is vital for long-term economic planning. Our findings call for institutional reforms to break this cycle.”

The research, published on May 9, 2025, is available online at Taylor & Francis. It builds on Prof. Farzanegan’s extensive work on the resource curse and offers a fresh perspective for policymakers and researchers alike. Read it at: https://doi.org/10.1080/13504851.2025.2503512