Free Essay Example: Examples of Time Lags

Published: 2023-11-12
Free Essay Example: Examples of Time Lags
Type of paper:  Essay
Categories:  Psychology Economics Human
Pages: 4
Wordcount: 876 words
8 min read

Time Lag can be defined as the difference or delay between an action and its consequences (Pettinger, 2018). One major drawback of time lag is that the effect of the policy often poses a significant challenge in quantifying these effects because of the time differential. From an economic perspective, examples of time lags include a change in the price of a commodity, level of investment, change in interest rate, or effects of devaluation (Pettinger, 2018). While time lags pose a considerable economic threat, the three primary reasons why a time lag takes place is associated with three primary factors: psychological factors, institutional factors, and technological factors. This essay thus endeavors to discuss the above factors and how they contribute to time lags by providing relevant cases and examples.

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Psychological time lag

Psychological time lag emerges because of the time differential between the present time (clock time) and when one dwells on a mental situation (Thum, 2008). Time in its nature is absolute, but when assigned to a particular purpose or action, it becomes “perishable.” In other words, time becomes a commodity with an expiration date. As Thum (2008) argues, when one dwells in the past or future (mental world) through imagination or projection, one becomes unsatisfied and will often dismiss the present. In other words, it becomes a means to the end, as the majority will prefer to be in the end.

Psychological time lag poses a significant challenge to the economy from a productive perspective. In a mental time lag situation, individuals are trapped in “time.” That is, individuals develop problems out of a case in the mind. Businesses, corporations, as well as organizations also fall victim to the psychological time lag by making decisions based on the projections (future) and past events that have affected the business. When a previous situation reports good outcomes, a majority tend to dwell on the case thus missing numerous opportunities in the present such as new technology, strategy, or market.

Technological time lag

The technological time lag is the delayed technological innovations to solve the current economic problem. In a study conducted by Dan Wang, Xinlin Zhao, and Zhenshan Zhang (2016) found out that there are considerable time lags in the distribution and the four dominant feedback loops in the various innovation inputs and influencing factors in the internal transformation (Wang, Zhao, & Zhang, 2016). The study results indicate that there is a steady increase trend of time lags from R&D personnel and industry-academia-research collaboration, while R&D expenditure and the government’s macro-control take an inverted U-shaped pattern (Wang, Zhao, & Zhang, 2016). An excellent example of a technological time lag can be best demonstrated by real GDP per capita levels between the U.S. and China, France, Japan, and Mexico. Based on the figure below, the U.S. last passed China’s 2000 level of GDP per capita in 1894, 106 years before 2000. Similarly, in 2000 the U.S. led Mexico by 60 years, France, and Japan by 14 (Comin, Hobijn, & Rovito, 2008).

Comparing electricity and informational technology to transport and agricultural technology, a significant difference in productivity have been recorded in each innovation. Statistics show that the wealth (real GDP) associated with each change is significantly higher than the predecessors (Comin, Hobijn, & Rovito, 2008). Another excellent example of a technological time lag can be best demonstrated in the automobile industry. Most of the often-used cars in Europe and Asia are shipped to Africa. This means that these exported cars become “new” in Africa while they are old in the original country (Wang, Zhao, & Zhang, 2016). This acts as a result delays African countries from inventing or being at the same level as their European and Asian counterparts.

Institutional time lag

Institutional time lags significantly involve the institutional perspective of economic production, such as academics, culture, and professional perspectives. In other words, an institutional time lag is defined as to the time gap between external (exogenous) conditions and the institutional (bureaucratic) adjustment or response (Buchanan, 2016). Brett Neilson (1997), argues that the modern academic studies lag behind the events they analyze. This means that there is a vast gap in organizational change delays witnessed given historical and contextual conditions, both internal and external to the agencies involved (Buchanan, 2016). in the contemporary age of the increasingly rapid information exchange, time lag raises critical questions about the efficacy of cultural analysis as a mode of political action in the modern technological environment. in summary, Institutionalization and professionalization issues concerning space, time, and the transnational circulation of knowledge have resulted in significant differences.


Buchanan, D. P. (2016, March 9). Paul Buchanan Analysis: Institutional Lag and the New Zealand Intelligence Community. Retrieved from EveningReport:

Comin, D., Hobijn, B., & Rovito, E. (2008). Technology usage lags. Journal of Economic Growth, 237-256. doi:10.1007/s10887-008-9035-5

Pettinger, T. (2018). Time Lags. Retrieved from Economics Help:,of%20time%20to%20actually%20occur

Thum, M. (2008, September 6). Clock Time vs. Psychological Time. Retrieved from Myrko Thum:

Wang, D., Zhao, X., & Zhang, Z. (2016). The Time Lags Effects of Innovation Input on Output in National Innovation Systems: The Case of China. Discrete Dynamics in Nature and Society. doi:

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