Losing the key to joy: how oil rents undermine patience and economic growth

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Mohammad Reza Farzanegan
June 03, 2025

How does reliance on oil revenues shape economic behaviour worldwide? This column reports new research showing that oil rents weaken governance, eroding patience – a key driver of economic growth and, according to the 13th century Persian poet Rumi, ‘the key to joy’. Policy measures to counter the damage include enhancing transparency in oil revenue management, strengthening independent oversight institutions and ensuring that sovereign wealth funds have robust rules of governance.

In a nutshell

Patience is not merely a personal trait: it shapes critical economic behaviours such as saving, investment and long-term planning, which are essential for sustainable growth and development.

Oil rents undermine patience globally by weakening governance, exacerbating the resource curse; targeted institutional reforms, oversight and long-term investment can mitigate these effects, alongside initiatives that promote delayed gratification.

Reforms targeting corruption control, regulatory quality and law enforcement are likely to be more effective than broader democratisation efforts in mitigating the negative behavioural effects of oil wealth.

Oil-dependent economies worldwide face the challenge of managing resource wealth to foster sustainable economic growth. A critical but under-explored issue is how oil rents influence individual behaviours, particularly patience, which is strongly linked to economic development (Falk et al, 2018).

My research (Farzanegan, 2025) demonstrates that oil rents undermine patience by weakening governance, a key mechanism of the resource curse. Using global data from 76 countries, the study provides evidence-based policy recommendations to counteract these effects through institutional reforms, offering insights for oil-rich nations seeking to build resilient economies.

Patience and economic growth

Patience, defined as the willingness to forgo immediate rewards for greater future gains, is a cornerstone of economic prosperity. It correlates strongly with per capita income (see Figure 1), physical and human capital accumulation, and productivity (Potrafke, 2019).

Figure 1: Income and patience

My analysis, based on the Global Preference Survey (GPS) conducted in 2012 as part of the Gallup World Poll, finds that a one-standard-deviation increase in oil rents as a share of GDP (averaged from 2002 to 2011) reduces patience by 0.17 standard deviations (see Figure 2).

Figure 2: Overall effect of oil rents on patience (in the absence of mediation)

This effect is statistically significant at the 5% level and is fully mediated by governance quality, measured by the average of six World Bank indicators: control of corruption, government effectiveness, regulatory quality, rule of law, voice and accountability, and political stability. Specifically, a one-standard-deviation increase in oil rents lowers governance quality by 0.35 standard deviations, which in turn reduces patience by 0.73 standard deviations – a substantial effect significant at the 1% level (see Figure 3).

Figure 3: The mediated effect of oil rents on patience via governance

These findings remain robust when controlling confounding factors such as log GDP per capita, unemployment, income inequality (Gini index) and continental dummies (see Figure 4).

Figure 4: The mediated effect of oil rents on patience through governance with more controls

Governance as the key mediator

The governance channel is central to this relationship. Oil rents often foster corruption (Farzanegan and Zamani, 2025), weaken institutional frameworks and increase economic and political uncertainty, which shortens individuals’ time horizons (Ross, 2012).

My mediation analysis based on using Structural Equation Modeling shows that the negative effect of oil rents on patience operates entirely through weakened governance. When governance quality is included as a mediator, the direct effect of oil rents on patience becomes statistically insignificant, while the indirect effect through governance is highly significant.

This full mediation underscores the critical role of institutions in shaping behavioural outcomes in oil-rich economies – from Nigeria to Norway, Kuwait to Venezuela.

Exploring governance dimensions

To explore the complexity of governance, I examine its six dimensions individually. The results show that control of corruption, government effectiveness, rule of law and regulatory quality are strong mediators, with significant indirect effects on patience. For example, a one-standard-deviation increase in oil rents reduces control of corruption, which in turn lowers patience by 0.24 standard deviations.

In contrast, voice and accountability, and political stability show weaker, non-significant indirect effects. This suggests that institutional weaknesses related to state capacity and administrative efficiency, rather than democratic accountability, are the primary channels through which oil rents erode patience.

These findings highlight the need for targeted reforms that strengthen specific governance dimensions to mitigate the behavioural consequences of oil wealth (see Table 1).

Table 1: Direct and indirect effects of oil rents on patience through different dimensions of governance (including control variables)

Implications for the resource curse

The implications of these findings are profound for oil-dependent economies. Patience is not merely a personal trait: it shapes critical economic behaviours such as saving, investment and long-term planning, which are essential for sustainable growth (Doepke and Zilibotti, 2008). By undermining patience, oil rents exacerbate the resource curse, contributing to slower growth, higher corruption and weaker institutions. Yang et al (2023) show that patience discourages corruption.

My study adds a behavioural dimension to the body of research evidence on the resource curse, complementing earlier work on mechanisms like Dutch disease, conflict and reduced educational quality (van Wijnbergen, 1984; Bjorvatn and Farzanegan, 2015; Farzanegan and Thum, 2020).

The erosion of patience may explain why oil-rich countries often struggle to diversify their economies and invest in human capital, perpetuating dependency on volatile resource revenues.

Policy recommendations

To address these challenges, governments in oil-dependent economies can adopt a three-pronged policy approach focused on institutional reforms.

First, enhancing transparency in oil revenue management is essential to reduce corruption and build public trust. Practical steps include publishing oil contracts, revenue flows and budget allocations in accessible, user-friendly formats. Countries like Norway have successfully implemented such measures through transparent resource management frameworks, which could serve as a model for others.

Second, strengthening independent oversight institutions, such as anticorruption agencies or parliamentary budget offices, can curb resource mismanagement. These institutions should be empowered with legal authority and sufficient resources to monitor and audit oil revenue effectively.

Third, establishing or reforming sovereign wealth funds with robust governance rules can shift the focus from short-term redistribution to long-term public investment. Allocating a portion of oil income to sectors like education, health or infrastructure through such funds can foster future-oriented development and encourage patience among citizens.

Moreover, since patience is critical for economic growth, shaping how people spend, save and invest (Falk et al, 2018), policymakers can support initiatives that promote delayed gratification, even amid the challenges of governance. Examples include:

Launching financial literacy programmes that teach the value of saving and long-term investment, countering the short-term focus driven by oil-related uncertainty.
Supporting educational systems, which are linked to patience and skill development (Farzanegan and Thum, 2020), can help individuals to adopt a longer-term perspective.

Challenges and considerations

These reforms, while incremental, are not without challenges. Implementing transparency measures requires political will, as entrenched elites may resist efforts to curb rent-seeking. Strengthening oversight institutions demands investment in capacity-building and protection against political interference. Sovereign wealth funds, while effective, require clear rules to prevent mismanagement, as seen in cases like Iran (Farzanegan and Zamani, 2025; Farzanegan and Krieger, 2019).

Nevertheless, these steps can create a virtuous cycle: stronger institutions reduce uncertainty, foster public trust and promote a social environment where patience thrives. My analysis suggests that reforms targeting corruption control, regulatory quality and law enforcement are likely to be more effective than broader democratisation efforts in mitigating the negative behavioural effects of oil wealth.

Conclusion

Oil rents dependency undermines patience globally by weakening governance, exacerbating the resource curse. Through targeted institutional reforms, oversight and long-term investment – governments can mitigate these effects, fostering behaviours conducive to growth.

These insights are critical for oil-dependent economies seeking to diversify and build resilient institutions, ensuring that resource wealth becomes a blessing rather than a curse.

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