Tuesday, August 19, 2008

The impact of national culture on economic outcomes   posted by Herrick @ 8/19/2008 09:20:00 PM

The first correct daily temperature forecast was not broadcast [in China] until July 1999. Previously, temperature predictions were never permitted to fall outside the range for efficient factory work.

That's from Cultures Merging: A Historical and Economic Critique of Culture, by Eric Jones. Jones is best known for his book The European Miracle, an anti-Pomeranz text if there ever was one. In Cultures Merging, he provides decent anecdotal evidence that while "bad culture" might be able to hold back a country back a little, cultures are actually fairly fluid over the span of decades, and tend to steer in the direction of economic efficiency (a point emphasized by Clark). Jones's pet example is East Asia, where Confucianism was once said to be a barrier to economic development (too much blind obedience to the dead hand of hierarchy) but is now lauded as the driving force behind superior "Asian Values" of hard work and sacrifice.

The first half of the book (parts one and two of four total) can be easily recommended to those interested in the culture question. Lots of stories, some big-think, some bold generalizations. The second half is filled with stories about his Asian graduate students; not sure what that's all about.

But while it's fun to read books about culture, it sure would be nice to bring some rigor to the debate, wouldn't it? My preference--typical for an economist--is to look for the key under the lamppost of things we can actually measure. Lynn and Vanhanen's national average IQ measures spring to mind--and boy are those scores ever robust as predictors of national economic outcomes. And Jones and Schneider show that even if you control for "cultural" variables like Confucianism, Islam, or Buddhism, the nation's average IQ is still a strong predictor of economic performance. High-IQ groups are likely to have some good cultural traits like patience, cooperativeness, and a tendency to agree with economists on the merits of untrammeled competition.

What'd be nice to know at this point is "What's left after you control for national average IQ?" Do cultural variables (as measured in, say, the World Values Survey) still have predictive power? It might be all stems and seeds, but right now we don't know. Sure would be nice if someone out there did some research into this....

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