Proposal preview

The Long-Run Economic Consequences of Culture and Institutions

Presenters

Nathan Nunn (Harvard University). “Cultural Evolution and Long-Term Economic Development”

Stelios Michalopoulos (Brown University). “The Erosion of Civilizations”

Jared Rubin (Chapman University) and Murat Iyigun (University of Colorado). “A Theory of Conservative Revivals”

Sascha Becker (Warwick University). “Long Run Consequences of the Reformation”

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, nnunn@fas.harvard.edu
  • Stelios Michalopoulos, Brown University, stylianos_michalopoulos@brown.edu
  • Jared Rubin, Chapman University, jrubin@chapman.edu
  • Sascha Becker, Warwick University, S.O.Becker@warwick.ac.uk

Proposed 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