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Culture matters

My wonderful NYU Economics colleague Raquel Fernandez has been carrying out a fascinating research program on the effect of culture on development outcomes. The academic literature on this is exploding, and Raquel surveys it in a recent paper.

A simple yet powerful methodology for exploring the role of culture is to study differences in behavior among second-generation immigrants to the U.S. The idea is that all of them face a similar environment in the US, yet bring with them the cultural differences of their parents’ country of origin. So differences in immigrant behavior could be attributed to culture (with a large number of caveats that Raquel addresses in her paper).

The figure below shows the association between attitudes about “trust” in the country of origin and “trust” in immigrants to the US from that country.

Click for larger image

A second figure shows the association between female labor force participation in the country of origin and how many women work among immigrant groups.

Click for larger image

Researching culture used to be taboo in economics; thank goodness that has changed. The finding that “culture matters” reinforces the recent general finding in academic development research that very long-run factors matter more in development than we used to think.

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  1. I am not surprised. The parents of a friend left Nazi Germany in the late 1930s and landed in Peru. Initially, they had no job, few connnections. Five or six years later, however, the vast majority of German refugees were back to the social stratum they had occupied in Germany – not higher, not lower. Doctors worked as doctors once again, sales persons as sales persons, and so forth. Culture seems to be a powerful force toward reversion to the (experienced) mean.

    Posted January 18, 2011 at 9:11 am | Permalink
  2. Thanks for finally letting this cat out of its box. Culture does indeed matter. Sadly our political correctness has prevented us from saying so directly and sent us looking for just about any other reason on earth. After 10 years in South Asia, I promise you the culture 100% matters. The leading cause of death amongst women of childbearing age in Nepal is suicide. That’s not because of the water, the air or global warming.

    Posted January 18, 2011 at 9:15 am | Permalink
  3. Don Stoll wrote:

    Relevant vital questions—perhaps noted in Prof. Fernandez’ caveats?—include the extent of cultural malleability and how far any individual originating in a given culture can defy or transcend its normative expectations.

    Posted January 18, 2011 at 9:39 am | Permalink
  4. Jude wrote:

    Any idea on the relationship between culture, and associated concepts of trust etc,and religion, surely one simply mirrors the other.(i.e. Culture is a outworking of religion and thus is deeply influenced by it).

    The other point – probably addressed in the paper – is the quite obvious link between “culture” and race,Would it tell the same story?

    Posted January 18, 2011 at 10:36 am | Permalink
  5. Maxamed wrote:

    what do you mean by trust?

    Posted January 18, 2011 at 12:45 pm | Permalink
  6. lark wrote:

    Lack of clarity, at least in this post, re: such a complex term as ‘culture’. How is it different than social capital? Immigrants arrive with social capital, in differing degrees.

    Posted January 18, 2011 at 2:06 pm | Permalink
  7. Joe wrote:

    Well Bill, you’ve really done it this time – those are two of the most idiotic and poorly explained graphs of all time. What exactly are they showing? Trust relative to a British migrant?!? wtf?

    Don’t they teach economists to use a scale and explain what it is? Presumably LFP is labour force participation. So what is a log of that? I guess I’m going to have to attempt to read the academic paper and hope it makes considerably more sense than this blog.

    Posted January 18, 2011 at 3:09 pm | Permalink
  8. Joe wrote:

    Wow. Figure 3 in that paper is even better. My gast is flabbered.

    Posted January 18, 2011 at 3:23 pm | Permalink
  9. Ana wrote:

    “Researching culture used to be taboo in economics” Huh? Guess Frederick Pryor didn’t listen.
    I also seem to remember reading Thorstein Veblen in grad school. And Robert Frank, who is not a nobody. And there is a journal, for goodness sake, that you have published in, Easterly, called Eocnomic Development and Cultural Change! George Homas, of course, was in sociology, but he did have a wonderful and trenchant critique of the “culture vultures.” He’s worth re-reading.
    Your perspective smacks of self-aggrandizement: the narrative that makes people who study culture “brave and courageous” while everyone else is an idiot?

    Posted January 18, 2011 at 4:03 pm | Permalink
  10. Dan Kyba wrote:

    Nobel laureate Douglass North lays out the protocol for economic, institutional and cultural change:

    • As technology changes, so will the transaction costs, efficiencies and effectiveness of business.
    • To economize on these gains, formal institutional and governance change will follow, albeit at a slower pace than technological change.
    • To further economize on these gains, cultures and civil society will change as well, albeit at a still slower pace.

    This is never a synchronious process so all economic systems have their inefficiencies and societies their stresses.

    Posted January 18, 2011 at 6:33 pm | Permalink
  11. Tord Steiro wrote:

    How would you know that the migrants to the US reflects an average of the citizens in the country they left?

    Most countries are fractioned to some extent, and the culture may be very different between different fractions of society. If one minor fraction is over-represented, which I would guess is quite likely, these results would be pretty dubious, and there is little you can do about it.

    However, by all means, the research is certainly fascinating!

    Posted January 19, 2011 at 4:37 am | Permalink
  12. geckonomist wrote:

    Wait a minute. A few posts ago, the quest for growth was ended : we just need to invest it all in the adolescent girls.
    Based on logic and comprehensive evidence.

    And now that’s not true anymore, because the girl might be culturally unable to “develop” ??

    it seems a director in you institute is really needed, to help make up your mind.

    Posted January 19, 2011 at 4:56 am | Permalink
  13. Koen wrote:

    Gerard Roland has an interesting paper on culture and economics:

    Posted January 19, 2011 at 6:54 am | Permalink
  14. Till Bruckner wrote:

    We all know that culture matters (though few aid organizations will admit to this in public). There’s also plenty of anthropological and cross-cultural social psychology material out there already. What we need now is solid empirical evidence from the ground.

    In my view, immigrant trust levels don’t meet this criterion. Trust levels in communities that maintain projects versus trust levels in comparable communities that don’t would be much better – assuming that trust really is the key variable here, which is merely an untested hypothesis taken from the civil society literature.

    I once read an interesting study on long-term development experiences in Northern Pakistan (by some Agha Khan offshoot) that argued – in wonderfully cloaked language – that Shi’a areas had developed less than Ismaili areas due to cultural differences, e.g. attitudes to educating girls.

    Any aspiring PhD students out there looking for a fresh topic?

    Posted January 19, 2011 at 3:56 pm | Permalink
  15. Lel0001 wrote:

    I have to strongly agree with this blog post. Culture and how individuals are brought up, as well as different situations and circumstances people live in, strongly effects who an individual is. Culture can effect what someone believes in as well as what type of aid they might accept. I believe culture is one of the larger factors that should be taken into account for who people are and also for the development of different countries.

    Posted January 28, 2011 at 11:48 am | Permalink

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