Proposal preview

The Long-Run Economic Consequences of Culture and Institutions

Presenters

Nathan Nunn (Harvard University). “Bride Price and Female Education”

Stelios Michalopoulos (Brown University). “Folklore and the Ethnographic Atlas”

Jared Rubin (Chapman University) “The Cultural Transmission of Trust Norms: Evidence from a Lab in the Field on a Natural Experiment”

Sascha Becker (Warwick University). “Social Cohesion, Religious Beliefs, and the Effect of Protestantism on Suicide”

Abstract

Only recently have economists and economic historians begun to appreciate how the interaction between institutions and culture affects long-run economic outcomes. One strand of this growing literature focuses on the effect that historical institutions had on shaping culture, which in turn affected economic outcomes. For instance, Alesina, Giuliano, and Nunn (2013) study the link between traditional plough agriculture (and its associated institutions) and the evolution of gender norms, finding that the descendants of societies that traditionally practiced plough agriculture today have lower rates of female participation in the workplace, in politics, and in entrepreneurial activities. They identify cultural transmission as the mechanism connecting traditional practices with modern outcomes. Michalopoulos and Papaioannou (2016) shows that the ethnic partitioning that resulted from the late 19th century “Scramble for Africa” still has detrimental effects in the present day, leading to greater incidences of violence and participation in civil wars. Becker et al. (2016) analyze data on either side of the old Habsburg-Ottoman border and show that institutions put in place by these regimes affect trust norms – which are an essential element of impersonal exchange – differently in the present. Rubin and Karaja (2017) provide another test of this insight, employing a field experiment on either side of the old Habsburg-Ottoman border and find that trust norms are indeed influenced by historical economic institutions. Jha (2013) shows that the degree to which South Asian Hindus and Muslims historically provided complementary economic services to each other can account for a substantial fraction of Hindu-Muslims riots between 1850-1950. Similarly, Voigtländer and Voth (2012) find that towns with Jewish pogroms during the Black Death were more likely to have anti-Jewish violence during the Nazi era, although trade helped mitigate this connection. Tabellini (2010) provides empirical evidence that numerous cultural attributes – many of which are strong predictors of modern economic well-being – are consequences of a society’s institutional past. In an earlier work, Tabellini (2008) argued that “generalized morality” (i.e., individual values that support the generalized application of norms of good conduct) evolves from a society’s institutional past and is related to well-functioning institutions in the present. Greif and Tabellini (2015) build on these insights, showing how kin-based cultures coevolve with clan-based enforcement institutions while “generalized morality” cultures coevolve with more corporate, group-independent institutional forms.

Many of the above cited papers are all co-authored by one of the presenters on this panel. This literature clearly extends beyond the authors of this panel, as is suggested by the numerous survey articles on the co-evolution of cultural traits and long-run economic development (Guiso, Sapienza, and Zingales 2006; Nunn 2012; Spolaore and Wacziarg 2013; Alesina and Giuliano 2015; Gershman 2016). Yet, while all of these papers have contributed greatly to our understanding of the mechanism linking culture and institutions to economic outcomes, there are still many open questions left to be addressed and methodological practices to be explored. To what extent do geography and endowments affect culture, and how much of the long run economic effect of endowments channeled through culture? Under what conditions does culture change endogenously in response to economic stimuli, and when does it fail to change? Are there well-identified natural experiments in history that can be exploited to help distinguish between the cultural and institutional channels? What has been the role of culture and institutions – and their interaction – in enabling the persistence of poverty and violence in the most underdeveloped parts of the modern world?

The papers cited above shed light on the methodologies one might use to answer these questions. Yet, these questions remain open. This session aims at addressing some of these questions, although it of course leaves many unanswered. It consists of four papers listed above. All presenters have agreed to participate.

Organizer(s)

  • Jared Rubin Chapman University jrubin@chapman.edu USA

Session members

  • Nathan Nunn, Harvard University
  • Stelios Michalopoulos, Brown University
  • Jared Rubin, Chapman University
  • Sascha Becker, Warwick University

Discussant(s)

  • Jeanet Bentzen University of Copenhagen jeanet.bentzen@econ.ku.dk
  • Mark Koyama George Mason University mark.koyama@gmail.com
  • Metin Cosgel University of Connecticut Metin.Cosgel@UConn.edu
  • Mara Squicciarini Northwestern University mara.squi@northwestern.edu

Papers

Panel abstract

Only recently have economists begun to appreciate how the interaction between institutions and culture affects long-run economic outcomes. While a growing literature has contributed greatly to our understanding of the mechanisms linking culture and institutions to economic outcomes, there are still many open questions left to be addressed and methodological practices to be explored. To what extent do geography and endowments affect culture, and how much of the long run economic effect of endowments channeled through culture? Under what conditions does culture change endogenously in response to economic stimuli, and when does it fail to change? Are there well-identified natural experiments in history that can be exploited to help distinguish between the cultural and institutional channels? What has been the role of culture and institutions – and their interaction – in enabling the persistence of poverty and violence in the most underdeveloped parts of the modern world?

1st half

Bride Price and Female Education

Nava Ashraf, Natalie Bau, Nathan Nunn, and Alessandra Voena

Although it is well known that traditional cultural practices can play an important role in development, we still have little understanding of what this means for development policy. To improve our understanding of this issue, we examine how the effects of school construction on girls' education vary with a widely-practiced marriage custom called bride price, which is a payment made by the husband and/or his family to the wife's parents at marriage. We begin by developing a model of educational choice with and without bride price. The model generates a number of predictions that we test in two countries that have had large-scale school construction projects, Indonesia and Zambia. Consistent with the model, we find that for groups that practice the custom of bride price, the value of bride price payments that the parents receive tend to increase with their daughter's education. As a consequence, the probability of a girl...

Although it is well known that traditional cultural practices can play an important role in development, we still have little understanding of what this means for development policy. To improve our understanding of this issue, we examine how the effects of school construction on girls' education vary with a widely-practiced marriage custom called bride price, which is a payment made by the husband and/or his family to the wife's parents at marriage. We begin by developing a model of educational choice with and without bride price. The model generates a number of predictions that we test in two countries that have had large-scale school construction projects, Indonesia and Zambia. Consistent with the model, we find that for groups that practice the custom of bride price, the value of bride price payments that the parents receive tend to increase with their daughter's education. As a consequence, the probability of a girl being educated is higher among bride price groups. The model also predicts that families from bride price groups will be the most responsive to policies, like school construction, that are aimed at increasing female education. Studying the INPRES school construction program in Indonesia, as well as a similar program in Zambia, we find evidence consistent with this prediction. Although the program had no discernible effect on the education of girls from groups without bride price, it had large positive effects for girls from groups with a bride price. The findings emphasize the importance of the marriage market as a driver of educational investment and provide an example of how the cultural context of a society can be crucial for the effectiveness of development policy.

Folklore and the Ethnographic Atlas

Stelios Michalopoulos and Melanie Xue

Folklore is the collection of traditional beliefs, customs, and stories of a community, passed through the generations by word of mouth. This vast expressive body, studied by the corresponding discipline of folklore, has evaded the attention of economists. In this study we introduce a unique dataset of folklore that codes the presence of thousands of motifs for roughly 1,000 pre-industrial societies and use a dictionary-based approach to elicit the group-specific intensity of various traits related to its natural environment, institutional framework, and mode of subsistence. We establish that such measures are in accordance with the ethnographic record, suggesting the usefulness of folklore in quantifying currently non-extant characteristics of pre-industrial societies including the role of trade.

Folklore is the collection of traditional beliefs, customs, and stories of a community, passed through the generations by word of mouth. This vast expressive body, studied by the corresponding discipline of folklore, has evaded the attention of economists. In this study we introduce a unique dataset of folklore that codes the presence of thousands of motifs for roughly 1,000 pre-industrial societies and use a dictionary-based approach to elicit the group-specific intensity of various traits related to its natural environment, institutional framework, and mode of subsistence. We establish that such measures are in accordance with the ethnographic record, suggesting the usefulness of folklore in quantifying currently non-extant characteristics of pre-industrial societies including the role of trade.

2nd half

The Cultural Transmission of Trust Norms: Evidence from a Lab in the Field on a Natural Experiment

Jared Rubin and Elira Karaja

We conduct trust games in three villages in a northeastern Romanian commune. From 1775-1919, these villages were arbitrarily assigned to opposite sides of the Austrian and Ottoman/Russian border despite being located seven kilometers apart. All three villages were ruled by outsiders to Romania, with Russian and Ottoman scal institutions being more rapacious. We conjecture that this history, combined with historical selective migration, contributed to a culture of mistrust of outsiders (relative to co-villagers) on the non-Austrian side of the border. Our design permits us to test this conjecture, and more generally, whether historically-derived cultural norms are transmitted intergenerationally. We fi nd that participants on the Ottoman/Russian side that also have family roots in the village are indeed less likely to trust outsiders but more likely to trust co-villagers.

We conduct trust games in three villages in a northeastern Romanian commune. From 1775-1919, these villages were arbitrarily assigned to opposite sides of the Austrian and Ottoman/Russian border despite being located seven kilometers apart. All three villages were ruled by outsiders to Romania, with Russian and Ottoman scal institutions being more rapacious. We conjecture that this history, combined with historical selective migration, contributed to a culture of mistrust of outsiders (relative to co-villagers) on the non-Austrian side of the border. Our design permits us to test this conjecture, and more generally, whether historically-derived cultural norms are transmitted intergenerationally. We fi nd that participants on the Ottoman/Russian side that also have family roots in the village are indeed less likely to trust outsiders but more likely to trust co-villagers.

Social Cohesion, Religious Beliefs, and the Effect of Protestantism on Suicide

Sascha O. Becker and Ludger Woessmann

In an economic theory of suicide, we model social cohesion of the religious community and religious beliefs about afterlife as two mechanisms by which Protestantism increases suicide propensity. We build a unique micro-regional dataset of 452 Prussian counties in 1816-21 and 1869-71, when religiousness was still pervasive. Exploiting the concentric dispersion of Protestantism around Wittenberg, our instrumental-variable model finds that Protestantism had a substantial positive effect on suicide. Results are corroborated in first-difference models. Tests relating to the two mechanisms based on historical church-attendance data and modern suicide data suggest that the sociological channel plays the more important role.

In an economic theory of suicide, we model social cohesion of the religious community and religious beliefs about afterlife as two mechanisms by which Protestantism increases suicide propensity. We build a unique micro-regional dataset of 452 Prussian counties in 1816-21 and 1869-71, when religiousness was still pervasive. Exploiting the concentric dispersion of Protestantism around Wittenberg, our instrumental-variable model finds that Protestantism had a substantial positive effect on suicide. Results are corroborated in first-difference models. Tests relating to the two mechanisms based on historical church-attendance data and modern suicide data suggest that the sociological channel plays the more important role.