Centralized economies hinder growth, market economy leads to higher welfare.
The article explores how people's tendency to prioritize the present over the future affects economic systems. By studying a model with different types of decision-makers, the researchers found that a market economy grows faster and is better for society when negative consequences are small. However, a centralized economy can be more beneficial when negative effects reach a certain level. The researchers also discovered that the impact of this threshold increases with how flexible people are in changing their consumption habits over time. In simpler terms, the study shows that different economic systems work better depending on how much people care about the future and how willing they are to change their behavior.