The impact of national culture on economic outcomes
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….
Remind me, what is the IQ of North and South Korea?
Maybe the Flynn effect is the result of development, and IQ and development are linked for that reason.
Cultures are actually fairly fluid over the span of decades: this is true. This is the anti-essentialist argument: if a few control settings are changed, a culture can remain mostly the same while behaving much differently. (But remember, government, law, and education are all “culture”).
….and tend to steer in the direction of economic efficiency: Meaningless or false. During most of history, many cultures were stagnant and inefficient, and many others fluctuated between relative efficiency and relative inefficiency. Very few tended in the direction of economic efficiency under any meaningful understanding of the term.
Since WWII at least there has been a considerable tendency toward economic efficiency, but it’s the result of deliberate policy at the levels of finance, the state, and international organization. Even Communism initially tended toward economic efficiency in formerly-traditionalist places like Uzbekistan.
David B: quite. And indeed East and West Germany.
it might be all stems and seeds…
I must say, I blinked a bit at the marijuana reference…
David B.: I’m guessing that he’d argue that totalitarianism is unstable in the long term, and the current partition, like E and W Germany, is only a short-term fluctuation. Just look at how far behind East Asia as a whole was a century ago, and where they are now.
Maybe the Flynn effect is the result of development, and IQ and development are linked for that reason.
Yes – Flynn shows IQ increasing so rapidly in the West that the change can’t possibly be genetic. An alternative hypothesis is that inhabitants of technological, industrialized countries are educated in particular types of thinking, and that also makes them better at doing IQ tests.
So rising IQ could be the effect of economic development, rather than its cause.
Remind me, what is the IQ of North and South Korea?
But perhaps a better comparison is Cuba and the US, no?
David B: quite. And indeed East and West Germany.
The US and the former Soviet Union?
Social systems that we in the West find anathema have shown surprising stability in the past and present, perhaps because they too can be stable systems, and, as China demonstrates, when one ruling lineage was overthrown, another rose to take its place …
Perhaps it is Western Democracies that will prove to be fleeting social developments.
Finally, intelligent people tend to be able to exploit whatever system exists around them, so, contra those who posit that the modern western world is so pure because it spread intelligence more equally, we might simply be seeing those lineages with the potential for further developing intelligence finding opportunity to do so. Natural selection is not egalitarian.
I would think that India’s caste system would serve as major deterrent to economic growth, seeing as how it’d tend to channel workers by custom rather than ability and limited mobility for large swathes of the general population. A bright untouchable kid, for example, might be condemned to life as a bonded laborer, even if his specialty were rocket science. If you look at present day Indian, the most caste afflicted regions tend to be the poorest and have the worst HDIs. The relatively egalitarian south, especially Kerala, shows much stronger stats and is developing into a world class technology hub.
Indian diaspora populations, contrary to their nation of origin’s low IQ, from relatively modest backgrounds have also done remarkably well in South Africa, UK, East Africa, Singapore, and elsewhere. I would posit that free from old world social constraints, there’s more opportunity for Indians to maximize their human capital in these freer environments. Of course nutrition, healthcare, and other factors play a major role too.
Social arrangements (Communism in China, cousin marriage in the Middle East, caste in India) seem to have an ability to retard the effective utilization of human capital.
Notice I’m talking about “culture,” not “institutions.”
That’s standard jargon in economic history: “culture” is patterns of behavior, not mandated by force, while the latter is patterns of behavior generally mandated by direct or indirect threat of state-sanctioned force.
So DavidB and bio, I’m talking about the former. I suspect most people would agree that the difference between N and S Korea isn’t “culture.” It’s guv’mint.
And this post is about culture.
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Oh, and Marc, I’d been thinking about ‘stems and seeds’ as a wine reference, but I was figuring it would yield multiple interpretations….
That’s standard jargon in economic history: “culture” is patterns of behavior, not mandated by force, while the latter is patterns of behavior generally mandated by direct or indirect threat of state-sanctioned force.
Where does culture end and institutions begin?
Since government is not some magical extra-social entity, and is, in fact, us, or, at least, some of us, can you really insist on a separation of culture and institutions?
This forum is in many respects biological, and from a a biological point of view institutions, because not genetically inherited or physiologically based, and because they vary independently of genetics, are “culture” rather than “nature” (or biology).
I’ve been arguing this definition here for some time.
Dear Richard Sharpe:
The line between “culture” and “institutions” ends at the DMZ and the Berlin Wall.
Same “culture” on both sides (at least in the short-run) but different “institutions.”
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.
great illustration of the pitfalls of abduction. i think we need a new model of “culture” because of these problems; or specifically deep vs. superficial aspects of culture.
One way to measure culture’s independent impact: Move the person from one country to another, and see how they behave in the new place.
Osili and Paulson do that in the new ReStat (link in “homepage” below).
Abstract:
We investigate the impact of institutions on financial development by analyzing the financial behavior of immigrants in the United States. We find that immigrants from countries with institutions that more effectively protect private property are more likely to own stock in the United States. The effect of home-country institutions is persistent and absorbed early in life. The impact of institutions is amplified for immigrants who live in metropolitan areas with many other immigrants from the same country. These findings are robust to (blah blah blah).
I recall that when I looked at the data some years ago (in a post here) I found that the ‘close correlation’ between national IQ and GDP per head depends very largely on the inclusion of sub-Saharan Africa. Take out Africa and the correlation is not impressive. There is also a chicken-and-egg problem (outside Africa). Countries with a lot of peasant farmers tend to have relatively low income and relatively low mean IQ. But we know from the old studies in the US and Europe (1920s-1950s) that rural IQ is routinely about 10 points below urban. And it’s not (mainly) due to selective migration. Slow rural life produces slow wits. So you would expect industrialisation and urbanisation to increase IQ as it increases wealth.
I recall that when I looked at the data some years ago (in a post here) I found that the ‘close correlation’ between national IQ and GDP per head depends very largely on the inclusion of sub-Saharan Africa. Take out Africa and the correlation is not impressive.
Whetzel and McDaniel truncated national IQs to a minimum of 90, it increased the correlation between IQ and GDP/c slightly from 0.62 to 0.65. Hunt and Witterman split the dataset into 35 developed and 45 developing countries. The correlations were 0.58 and 0.70 respectively.
Lynn and Vanhanen claimed a correlation of .76. I don’t know how W & D got their lower figure.
…It is also odd, but not impossible, that restricting the range of IQ should increase the correlation, contrary to the usual effect of restriction of range. But as I think I mentioned in my post, the scattergram really falls into three clusters: the developed countries, Africa, and a miscellaneous group of others. Unfortunately I threw away my scattergram some time ago, and I’m not going to re-do it! Maybe the correlation within each group is closer than I recalled. I don’t think I calculated it: I just eyeballed the scattergram. If there is a scattergram somewhere on the web it would be interesting to see it.
What is left after you factor out IQ? I don’t know, but I suspect that if natural resource abundance were taken into account, then there would be even less to attribute to culture. For example, a few oil-rich states and small island nations preferred by tourists probably skew Lynn and Vanhanen’s numbers a little.
This obsession with average IQ is misleading and in no way leads to the conclusion that say South East Asians are more intelligent than say Europeans. Average IQ is only a measure of IQ distribution within a society and is not a measure of absolute IQ.
For example you could remove the lowest 10 or 20% in terms of IQ from European populations and their average IQ would leap over that of say the Japanese which is currently a little higher than that of Europeans. Does Japans currently slightly higher average IQ therefore mean that the Japanese are more intelligent than Europeans? No it doesn’t it just means their IQ distribution is a little more favourable in terms of average IQ at this point in time.
In any society average IQ can vary over time depending on who manages to produce the most offspring. If the lowest IQ’s produce more offspring average IQ will fall. If the highest IQ’s produce more offspring then average IQ will rise. If you really wanted to evaluate IQ potential in populations you would have to find who had the highest absolute IQ’s not the highest average IQ.
you could remove the lowest 10 or 20% in terms of IQ from European populations and their average IQ would leap over that of say the Japanese which is currently a little higher than that of Europeans. Does Japans currently slightly higher average IQ therefore mean that the Japanese are more intelligent than Europeans?
On average, yes.
No it doesn’t it just means their IQ distribution is a little more favourable in terms of average IQ at this point in time.
Which is really just another way of saying, “on average, yes.” :-)
In any society average IQ can vary over time depending on who manages to produce the most offspring. If the lowest IQ’s produce more offspring average IQ will fall. If the highest IQ’s produce more offspring then average IQ will rise. If you really wanted to evaluate IQ potential in populations you would have to find who had the highest absolute IQ’s not the highest average IQ.
At least one person has suggested the possibility that the current East Asian-white IQ gap is the result of post-industrialization dysgenic trends, which hit Europe sooner than East Asia:
Lynn and Vanhanen have shown conclusively that IQ predicts economic development (Lynn and Vanhanen, 2002)… If Mongoloids are brighter than Caucasoids, the industrial revolution should have taken place in East Asia rather than Europe! Historical accident could be one explanation. But we also know that most Western societies experienced dysgenic fertility for intelligence since at least the time of the fertility transition in the late 19th century. Estimates of genetic selection differentials for IQ in the late 20th-century United States range between -0.35 and -0.8 IQ points per generation (Loehlin, 1997; Retherford and Sewell, 1988; Vining, 1995; Lynn, 1996). The selection differentials at the time of the fertility transition in the late 19th and early 20th centuries have most likely been larger than this (Lynn, 1996). Even if it turns out that the current disparity of 3 to 6 IQ points between East Asians and Europeans is genetic in origin it may well have evolved during the past two centuries, rather than the Ice Age as suggested by Lynn and Rushton.
The Idiocracy beckons.
I think you misunderstand my point Marc. I am really asking the question “How do you measure a races potential”. Rather than average IQ it would be better to look at the IQ of say the top 30% of that population. In this way you are looking at their true potential when the least intelligent in that society have been removed from the equation. Average IQ can seriously distort the picture. You could have a group with enormously high IQ at one end and very low IQ at the other and average IQ might make them look not particularly bright, but their brightest might be immensely bright.
“Even if it turns out that the current disparity of 3 to 6 IQ points between East Asians and Europeans is genetic in origin it may well have evolved during the past two centuries, rather than the Ice Age as suggested by Lynn and Rushton”
How can such a statement possibly hold true when the average IQ of a race can be manipulated by selective breeding. If you can make a race who previously had lower average IQ than another brighter by removing the lower IQ’s then how can you say that one is genetically more intelligent than another? Average IQ does not measure a races potential! You have to look at the higher IQ’s in the population.
I think you misunderstand my point Marc. I am really asking the question “How do you measure a races potential”. Rather than average IQ it would be better to look at the IQ of say the top 30% of that population. In this way you are looking at their true potential when the least intelligent in that society have been removed from the equation.
Ok, I went back and re-read your original post, and I have to confess I don’t understand what you mean by “absolute IQ.” Please explain, if you don’t mind. (I know tone doesn’t transfer well in the written word, especially on blog comments, so I’ll add here that I’m not being snarky.)
You seem to be making the point that the most intelligent people in a race are more representative of the race’s potential than is the race’s average IQ, but each race’s IQ elite falls on the right tail of a bell curve which contains everyone else in that race. So it stands to reason that if you have a group with an average IQ of 105, and another group with an average IQ of 100, then 1) you’re going to find more people with super-high IQs (say, 130+) in the first group than the second, and 2) if you measure everyone in both groups, the highest IQ you measure is more likely to come from a member of the first group than it is to come from a member of the second. Unless you have a narrower distribution in the first group, but I don’t see why that would be.
I *could* imagine a situation where you might have a lopsided or even a “two-humped” bell curve, and where the average IQ might therefore lead someone to believe that the group has fewer or dumber IQ elites than it actually has. For example, I suspect the “Israeli” bell curve would be a little funky looking given the IQ gap between Ashkenazi and Sephardic Jews. I would venture there are more and smarter geniuses in Israel than the average IQ of the country would suggest. But I suspect this is also a temporary phenomenon, which will fade away as intermarriage between the seperate groups distributes the high and low IQ genes more evenly throughout the Israeli population.
Anyway, I don’t think such a situation is the norm, and I think that average IQ is still a good proxy for a race’s potential as you define it because average IQ, as a measure, takes into account the one half of the population that is above average.
I believe it took quite a number of years for the effects of the industrial revolution to be felt throughout the entire West. By the reasoning quoted in Marc’s post (post-revolution dygenic breeding lead to the white-EA IQ gap), the backward regions of Europe that felt the effects later should tend to do better on IQ tests. We also would expect the English to do the worst. I don’t think the facts support this.
More realistically, the industrial revolution was a product of a number of variables. You can’t just analyze one variable and expect it to correlate perfectly in every situation.
As for the white v.s. EA IQ, there have been plenty of opinions given on it. La Griffe suggested verbal/analytic IQ correlates better with economic outcome, which favors caucasians. Personally I think that Flynn makes a persuasive case that caucasians score similar to EAs on IQ tests (or perhaps even very slightly higher), but EAs maximize their IQ potential more efficiently. Regardless, European whites and EAs seem to pretty much perform comparably on most of the important metrics.
Most IQ distributions ie. bellcurves are approximations, thats why they look symmetrical. In reality an accurate curve for a given population would not be exactly symmetrical. Not only would it not be symmetrical but there would be different IQ spreads for different population groups.
I believe that the caucasian IQ spread is wider than the east asian. The caucasian spread is about 15 standard deviations, the east asian about 10 SD. That means that although east asian average IQ is slightly higher, caucasians have a higher number of very high IQ’s than east asians. This is why average IQ is misleading.
I believe it took quite a number of years for the effects of the industrial revolution to be felt throughout the entire West. By the reasoning quoted in Marc’s post (post-revolution dygenic breeding lead to the white-EA IQ gap), the backward regions of Europe that felt the effects later should tend to do better on IQ tests. We also would expect the English to do the worst. I don’t think the facts support this.
They don’t, but that doesn’t mean that post-revolution dysgenic breeding didn’t have some effect, just that it wasn’t the only variable on the table. If the Brits had a pre-revolution mean IQ of 106 and the Croats had a mean pre-revolution IQ of 92, and the dysgenic breeding dropped the Brit average IQ 6 points and the average Croat IQ 2 points, the Brits would still have a heavy advantage.
Personally, I think that post-revolution dysgenic breeding has had some effect on national IQs, but I’m not prepared to hazard a guess on how large that effect would be, especially relative to other factors.
I believe that the caucasian IQ spread is wider than the east asian. The caucasian spread is about 15 standard deviations, the east asian about 10 SD. That means that although east asian average IQ is slightly higher, caucasians have a higher number of very high IQ’s than east asians. This is why average IQ is misleading.
Cite?
Ok Marc I’ve looked at this issue of different IQ variance among races again and have to admit that my statement that caucasians have greater variance seems not to be true. I picked that information up some time ago but looking at some more information I think it was wrong.
My objection to this average IQ thing is that people (including scientists) will make statements such as “greater east-asian intelligence may be caused by genetic factors”. The problem with this is that as I’ve already said, average IQ can be manipulated by for instance selective breeding. You could create a race of caucasians with an average IQ of 130 if you wanted to and the same with east-asians. Therefore how do you determine which one has superior genetic intelligence? It seems to me to be impossible to do unless one race has an upper IQ range that significantly outstrips the other which I do not believe is the case here.
The more I look into this intelligence thing the more mysterious it seems to be. There certainly seem to be different types of intelligence and I suspect that different races also have very different temperaments. I’m beginning to suspect that east-asians are better at things like maths whereas caucasians maybe more inventive. It’s interesting for example that in formula one racing when the Japanese have entered their own teams they have always done very poorly despite enormous resources from the likes of Honda and Toyota. In the end both these teams moved their grande-prix operations to Britain, something that I always found suprising. Are caucasians good at concept based stuff and therefore good at things like grande-prix car design?
I picked that information up some time ago but looking at some more information I think it was wrong.
it’s an urban legend we’ve had to debunk time and time again.
Flynn:
“The Chinese Americans I studied were the generation born in 1945-1949. They were no higher than whites even for non-verbal IQ yet out-performed whites by a huge margin in terms of eventual occupational status. That meant that they could give their own children the kind of privileged environment they had never had. The result was a pattern of IQ that put the subsequent generation of Chinese Americans at an IQ of 109 at say age six gradually falling to 103 by the late teens, as parental influence faded away in favor of peers. The extra 3 points the present generation has as adults is due to the fact that they are in cognitively more demanding universities and professions and because they have internalized a positive attitude to cognitively challenging activities and companions”
Gladwell:
Recalculated, the Japanese average came in not at 106.6 but at 99.2. Then Flynn turned his attention to the Chinese-American estimates. They turned out to be based on a 1975 study in San Francisco’s Chinatown using something called the Lorge-Thorndike Intelligence Test. But the Lorge-Thorndike test was normed in the nineteen-fifties. For children in the nineteen-seventies, it would have been a piece of cake. When the Chinese-American scores were reassessed using up-to-date intelligence metrics, Flynn found, they came in at 97 verbal and 100 nonverbal. Chinese-Americans had slightly lower I.Q.s than white Americans.
The Asian-American success story had suddenly been turned on its head. The numbers now suggested, Flynn said, that they had succeeded not because of their higher I.Q.s. but despite their lower I.Q.s. Asians were overachievers.
So, supposing Flynn is right there, what we should ask ourselves is whether the apparently greater East Asian efficiency in using what they’ve got is genetic or cultural. If it’s genetic, then they might as well have higher IQs – but of course, this isn’t quite as true at the higher levels. If whites really are even a couple of IQ points ahead naturally at the mean, that will translate into a significant discrepancy in their favour further up the bell curve which no amount of culture can erase.
Anyway, I can’t help thinking that all this concern about East Asian vs White IQ is a little bit misplaced given that the gap is clearly not greater than 5 IQ points either way. It’s obsessing over the size of the cat when there’s an elephant in the room – sub-saharan Africans, australian aborigines and certain other groups reliably scoring as much as 30 points less.