Culture and Economics. Gerard Roland

Transcription

1 Culture and Economics Gerard Roland

2 Introduc4on Economists have tradi4onally shied away from introducing culture into economics. View that culture relates to preferences and that economists have nothing to say about preference forma4on (leave that to sociologists). The primacy of economic interests, endowments, incen4ves Culture difficult to define and to measure. View that culture is vague explana4on used when one has no other good explana4on. In the past, no good theore4cal or empirical work on the effect of culture on economic outcomes.

3 Introduc4on. Difficult to ignore culture as there is cultural varia4on in ajtudes towards thrik, work and effort, role of women, openness which are likely to affect economic performance. Nowadays, economists are very interested by culture. There has been pioneering work of Greif on difference between Maghribi and Genoese traders in the late middle Ages in the mediterranean. We also have cross- country data bases measuring culture, making interes4ng empirical research possible. There are now also laboratory experiments on culture.

4 Some history of thought Karl Marx ( ) downplayed role of culture and considered that values derived from economic interest. ThriK is in interest of capitalism, collec4vism in interest of workers. Religion in interest of capitalists. Chicago school has similar views that beliefs determined by interests. Max Weber ( ) put Marx on his head and saw culture as driving force of economic change. The Protestant Ethic and the Spirit of Capitalism. Protestan4sm put higher emphasis on thrik and hard work. Karl Polanyi ( ) : religion and moral values mi4gate excesses of the market and of greed. Thornstein Veblen ( ) : culture where wealth is a symbol of social status leads to conspicuous consump4on. Other cultures emphasize knowledge or piety or courage in combat.

5 Plan of lecture What is culture? Why does culture maber? Why not just ins4tu4ons? How to measure culture? Research on different dimensions of culture

6 What is culture? The set of values and beliefs people have about how the world (both nature and society) works as well as the norms of behavior derived from that set of values. Comprehensive defini4on. Close to religion but somewhat more inclusive. Culture evolves somewhat more than religion Not culinary or clothing habits.

7 Cultural transmission Culture is mostly transmibed from parents to children but also via peers (Bisin and Verdier, 2000). Because of ver4cal transmission, lots of evidence that culture is slow- moving. Much of the literature on culture exploits the different countries of origins of migrants to the US as well as the 4me of arrival.

8 Culture and ins4tu4ons North (1990) : constraints on behavior imposed by rules of the game in society. Ins;tu;ons include any form of constraint that human beings devise to shape human interac;on. Includes formal and informal ins4tu4ons, social norms, culture. Very broad defini4on. Does not make sense to oppose culture and ins4tu4ons.

9 Culture and ins4tu4ons. Dis4nc4on made in Roland (2004): Slow- Moving ins-tu-ons: ins4tu4ons that can only change slowly (when they change) and generally change con4nuously. Fast- Moving ins-tu-ons: ins4tu4ons that can change very rapidly and mostly change in a discon4nuous way.

10 Culture and ins4tu4ons Poli4cal ins4tu4ons are fast- moving ins4tu4ons: revolu4ons, democra4za4on though fast change is not necessarily the rule. Strong discon4nuity in change. Social norms (and culture more broadly) are slow- moving ins4tu4ons. Some norms can change fast but not the culture of a society (basic values, world view). Legal ins4tu4ons are somewhat in between. Slow- moving ins4tu4ons can influence fast- moving ins4tu4ons.

11 Waves of migra4on to the U.S. Fischer (1989): different waves of seblers introduced different ins4tu4ons that were conform to their cultural values and beliefs. First wave ( ) were puritans who sebled in Massachussebs. They introduced ins4tu4ons adapted to their beliefs in the importance of educa4on and order: universal educa4on, high tax rates, large size of government, swik jus4ce, town mee4ngs Second wave ( ) were Cavaliers who migrated to Virginia mo4vated by primogeniture in order to find estates. They believed that inequality was natural and adopted different ins4tu4ons: low educa4on and taxes, lack of formal jus4ce

12 Waves of migra4on to the U.S. Third wave were Quakers ( ) who sebled in Delaware. Culture of high priority to personal freedom. Introduced limited government, equal rights, less harsh jus4ce. Fourth wave were ScoJsh- Irish ( ): believed in freedom from the law and right to armed resistance. Led to limited government and vigilante jus4ce. Overall, ins4tu4ons were endogenous to culture.

13 Murrell and Schmidt (2012) Evidence that whig culture predated the Glorious revolu4on of Poli4cal change affected by cultural change and not vice versa. Poli4cal and legal changes came later. There is other empirical evidence of the causal effect of culture on ins4tu4ons.

14 Figure 10 Yearly changes in the importance of 'Whig' Culture in England, Scale: Total change 1558 to 1714 =

15 How to measure culture? World values survey. Mul4- year survey on values in increasing number of countries. Most well known and used. Over a quarter million respondents worldwide. Nearly a thousand ques4ons. Ques4ons on values about: life, family and society; the environment; work; the importance of tradi4onalism; gender roles; democracy and government; health; educa4on; religion, spirituality and morality; honesty

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18 Schwartz and value types. Searches for core set of values with common cross- cultural meaning that can be used as a basis to compare culture across countries. Gathered between 1998 and 2000 samples of K- 12 schoolteachers and college students: 195 samples drawn from 67 na4ons and 70 cultural groups, each sample generally consis4ng of respondents for a total of over 75,000 surveys. Looks at values that are guiding principle in life.

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20 Individualism and collec4vism Individualis4c culture emphasizes individual achievement (standing out) and awards social status to success in individual achievement, be it economic, ar4s4c, scien4fic, humanitarian, Collec4vist culture emphasizes conformity and embeddedness in larger groups and frowns on devia4on from conformity. (see e.g. Plabeau 2000; Baland et al. 2007, Comola and Fafchamps, 2010; Jakiela and Ozier, 2011; )

21 Interna4onal Measurement of Individualism- Collec4vism Hofstede s (2001) measure of individualism versus collec4vism. Ini4ally based on surveys among IBM employees across the world to understand cultural differences within a corpora4on. Was generalized to 76 countries later on. Based on factor analysis of survey ques4ons. Loads posi4vely on valuing individual freedom, opportunity, achievement, advancement, recogni4on and nega4vely on valuing harmony, coopera4on, rela4ons with superiors. Measure validated by other studies on smaller samples. Schwartz cultural mappings with dimensions of intellectual and affec4ve autonomy opposing embeddedness have high correla4on with Hofstede data.

22 Individualism (Hofstede)

23 Research on culture Impossible to men4on all research on culture. Just give a few examples. Literature emphasizes role of trust and civicness on one hand, individualism and collec4vism on the other hand.

24 Culture of honour in US South More aggressive behavior in US South related to different sources of migra4on. Migrants in Northern US more from farming origin, migrants in Southern US more from herders (ScoJsh- Irish). Cable is more easily stolen than land and cable- herders had to develop aggressive behavior to defend themselves against thieves. Reinforces by presence of weak states. Cohen and Nisbeb(2000) did lab experiments on males from North and South and found differences in agressiveness (testosterone).

25 Culture of honour in US South Grosjean (2011) found that coun4es in US South with more ScoJsh- Irish Immigra4on prior to 1790 have higher rates of homicide today. This pabern does not exist in coun4es where ScoJsh- Irish were in minority (effect of horizontal cultural transmission).

26 Civic culture and ins4tu4ons. Complementari4es between culture and poli4cal ins4tu4ons (Tocqueville). Putnam (1993) on Italy. Same formal poli4cal ins4tu4ons but different cultural norms in North and South and different civic tradi4ons. Regions in the South had much higher instability (i.e. turnover) of regional governments, more delay in budget approval, worse sta4s4cal apparatus, a lower quality of legisla4on and lower provision of public goods. Ex.: For same funding of daycare program, Emilia Romagna in the North had set up a day care center for every 400 children whereas Campania in the South had only one center for every 12,560 children.

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28 City- states and the development of civic culture. Different histories of the North and the South of Italy. The South has known for more than a thousand years a feudal autocra4c rule of aristocra4c landlords. The towns of Northern Italy developed into vigorous city- states which were self- governed. Ac4ve associa4ons like the guilds were very influen4al in the life of these city- states. In the twelkh century, there was not really a development gap between the North and the South and the North was not really richer than the South. It only became richer on the basis of the development of the city- states.

29 Culture and ins4tu4ons Licht, Goldschmidt and Schwartz (2007) exploit gramma4cal differences (whether or not a pronoun I, You ) can be dropped in a sentence correlated with embeddedness versus autonomy. High score on the embeddedness variable (instrumented by pronoun frop) leads to lower scores on: 1) the rule of law, 2) non corrup4on and 3) democra4c accountability

30 Tabellini 2008 Tabellini linked the work of Licht et al. and of Putnam by emphasizing the rela4onship between trust and civic culture. Found that countries where there is more trust and respect have beber ins4tu4ons

31 Psychological founda4ons of individualism- collec4vism cleavage Trust is related to embeddedness and individualism- collec4vism. Cultural psychology finds that the most relevant cultural cleavage seems to be the individualism- collec4vism cleavage (see also Klasing, 2012) Why does the individualism- collec4vism cultural cleavage seem so important rela4vely to other cultural variables? Huge literature in cultural psychology documen4ng these differences, their origins and implica4ons.

32 Differences in Percep4on of self Percep4on of Self is fundamental to human behavior and is rooted in interac4ons with others and seizing of meanings from different cultural environments. Markus and Kitayama (1991): independent vs interdependent self. Independent self: self derives its iden4ty only from inner abributes of individual. These abributes are considered to reflect the essence of individual, to be stable across 4me and context, and their combina4on is seen as unique to the individual. Individual inner abributes significant for genera4ng and predic4ng behavior.

33 Differences in Percep4on of self Interdependent self: self derives iden4ty essen4ally from rela4ons with others. Self is not separate iden4ty but embedded in larger social group. Individual behavior derived from role in different social contexts and percep4on of others reac4on to their behavior as well as effect of own s ac4ons on others.

34 Differences in Percep4on of self In surveys, individuals from individualis4c countries (US, UK, Australia, Canada, Sweden, ) describe themselves through statements about inner psychological characteris4cs, personality traits, abili4es. Individuals from collec4vist cultures ( Africa, Malaysians, East Asians) describe themselves through rela4onal roles in society. Differences in self- percep4on have many implica4ons.

35 Differences in Self- knowledge Independent Self: search to know oneself through inner search. Interdependent Self: Know how one is being evaluated by others. Constant objec4ve self- awareness rela4ve to individualis4c culture.. Example: North Americans students less likely to cheat on a test when a mirror was present and were more self- cri4cal. No effect of mirror on Japanese students.

36 Difference in Consistency of Self Independent self emphasizes self- consistency at the cost of rigidity. Important for self- esteem. Interdependent self emphasizes as important to self- esteem adjustment to contexts and flexibility at the cost of consistency. Example: Japanese (but not American) self- descrip4ons dependent on who was in the room, are more self- cri4cal when in presence of professor. Koreans change self- descrip4on depending on situa4on but not Americans (with parents, roman4c partner, professor, friends,..). East Asians more ready to endorse contradictory views of their personality (introverted and extraverted) as well as more contradictory beliefs about reality (dialec4cs).

37 Example: aben4on to field and object

38 Rule- based versus associa4ve thinking

39 Other cogni4ve differences Noun bias in individualis4c cultures. Fundamental abribu4on error present in individualist cultures: explain behavior too much by someone s intrinsic abributes rather than by situa4on. Not present in collec4vist cultures where situa4on is taken more into account than disposi4ons of individual. People from individualis4c cultures pay more aben4on to literal explicit meaning of words, people from more collec4vist cultures pay aben4on to implicit meaning as well (tone, body language).

40 Differences in effort Independent self: abributes of individual do not vary. Interdependent self: individual is more malleable and can improve through effort. In collec4vist cultures, response to failure is more effort (say more remedial courses in learning). View of achievements as related to effort more than ability. In experiments, individuals can be manipulated to think that abili4es are important for task. In individualis4c cultures, response to failure is to look for alterna4ve task beber suited to one s innate talents. More emphasis on differences in ability than effort. In experiments, individuals can be manipulated to think that effort is important for task.

41 Differences in mo4va4on to fit in or s4ck out. People from more collec4vist cultures have stronger mo4va4on to fit in than those from individualis4c cultures whereas the laber prefer to s4ck out. When given a choice of pens, European- Americans more likely to choose minority- colored pen and Asian- Americans more likely to choose majority- colored pen. When presented array of shapes, European- Americans rate more highly unusual shape than East Asians. Adver4sements targe4ng East Asians more likely to emphasize connec4on with others whereas adver4sements targe4ng American middle class consumers more likely to emphasize uniqueness.

42 Differences in choice- making Independent self emphasizes autonomy of choice, interdependent self is more concerned with goal groups and is more willing to adjust behavior for beber coordina4on of group. In collec4vist cultures, choice of spouse or job made more oken by family than in individualis4c cultures. Asian- American children prefer tasks chosen by members of close community (ingroup) whereas European- American children prefer tasks chosen by themselves.

43 Differences in rela4onships: ingroups and outgroups. Independent self: behavior remains much the same in contacts with everyone. Interdependent self: behavior different with important, privileged rela4onships (ingroup) than with others (outgroup). European- Americans react in the same (nega4ve) way when choices were made for them whereas Asian- Americans react nega4vely only when a stranger makes the choice. Less free- riding among Chinese and Israelis when with ingroup than outgroup, no difference among Americans. People from collec4vist culture show more conformity with ingroup. This difference leads to more generalized trust in individualis4c cultures.

44 Differences in rela4onal mobility Individualis4c cultures: high rela4onal mobility. Rela4onships formed, maintained or dissolved if mutually beneficial. Exis4ng rela4onships are by defini4on rewarding. Collec4vist cultures: lower rela4onal mobility. One is born in fixed rela4onal network and joins less new interpersonal networks. Exis4ng rela4onships are less rewarding.

45 Individualism, innova4on and growth. Gorodnichenko and Roland (2010): endogenous growth model where individualism gives social status benefit to innova4on on top of monetary benefit and collec4vism has efficiency advantage in coordina4on. In equilibrium, the laber has no growth effect, only a level effect whereas the former has a growth effect. Empirical evidence confirms a causal effect from individualism to measures of long run growth and innova4on.

46 Econometric model Y i : measure of growth or innovation Ind i : measure of individualism X i : control variable

47 Empirical iden4fica4on Individualist culture is likely to be endogenous to economic outcomes. Measures of individualism instrumented by the difference in frequency of blood groups in different popula4ons rela4ve to the US (or UK). This variable can be argued to sa4sfy the exclusion restric4on since these are neutral gene4c markers having no direct effect on gene4c fitness. Why may it be a valid instrument? Culture like genes is transmibed from parents to children (see Bisin and Verdier, 2000, 2001). Gene4c measures can be seen as proxies for cultural transmission across genera4ons. People who are gene4cally closer are also likely to be culturally closer.

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51 Conclusions There are solid founda4ons in cultural psychology to the individualism- collec4vism cleavage being one of the major cross- cultural differences Theory predicts individualism has dynamic advantage in innova4on and collec4vism compara4ve advantage in coordina4on Causal evidence suppor4ve of the theory. Need to understand more the past and culture to understand cultural obstacles to development. Importance of culture does not imply fatalis4c ajtude towards development. Cultural imperialism does not work. Countries must find legal and poli4cal ins4tu4ons that are suited to their culture. Danger of value judgments in research on culture. There is a lot to cri4cize in cultures of developed countries and a lot to learn from cultures of less developed countries.