Lecture 7 - The Cultural Factor

Question 1

Resolution of the Mystery of Growth

Answer 1

Identifies the origins of growth in the past 200 years, after hundreds of thousands of
years of stagnation, and the forces that triggered the stagnation to growth

Question 2

Contribution to the understanding of the Mystery of Inequality

Answer 2

Variations in the timing of the take-off contributed to the divergence in income per capita in the past two centuries → deep-rooted geographical, cultural, and institutional characteristics

Question 3

new function for evolution of tech. progress

Answer 3

g_t+1ⁱ = g(e_t, L_t, Ω_tⁱ)
with Ω_tⁱ = characteristics affecting tech progress in country i

Question 4

What are other factors affecting technological progress

Answer 4

1. cultural traits
2. institutional characteristics
3. geography and climate

Question 5

new function for evolution of education

Answer 5

e_t+1ⁱ = e(g_t+1; Ψ_tⁱ)
with some country-specific characterisitics Ψ_tⁱ

Question 6

Definition

What are instituitons

Answer 6

Humanly devised constraints that structure human interaction. They are made up of formal constraints (rules, laws) and informal constraints (norms of behaviour, conventions or self imposed codes of conducts- essentially culture)

Today we have complusory schooling so it doesnt matter how much people value human capital or education -whether your parents are quality type or quantity type doesnt matter because you have school

Question 7

Definition

Culture

Answer 7

Preferences, social norms, and ideological attitudes which depend upon the capacity for learning and transmitting knowledge to succeeding generations and peers

More common now than before for your preferences to be influenced by things around you compared to just your parents

Horizontal learning from peers and teachers as well as vertical learning from parents and intergenerational transmission

Question 8

What incentives does culture shape

Answer 8

incentives to trust strangers, engage with trade, cooperate on a large scale

Question 9

What are cultural traits and what can they do

Answer 9

highly persistent but can also change rapidly

This social transmission occurs through learning, imitation, education and taboo, meaning that cultural characteristics may evolve far more rapidly than our genome does

Question 10

Why do culture and institutions need to evolve together

Answer 10

• Culture and institutions evolve together- it is hard for instituions to impact without cultural changes
• Rapid cultural changes are unlikely to have an effect unless is it accompanied by institutional change
• Seeing that some country is succeeding because it has some particular set of norms does not mean that those norms are good for any economy it depends on the context of the economy or country
• However forced cultural change can result in a backlash or an effect that was not anticipated

Question 11

What are some positive correlation patterns

Answer 11

1. patience correlates more with GDP
2. Higher trust, higher investment, higher GDP per capita

Question 12

Culture and the transition from stagnation to growth

Can culture explain the European take-off

Mokyr’s arguments

Answer 12

• propositional knowlegde: naturual laws/ science
• prescriptive knowlegde: techniques and instructions

together the interaction of these useful knowledge eventually led to major technological innovations and generate economic growth

• A belief in the possibility and desirability of human progress
• A belief that knowledge is actually supposed to be used (that is, applied to
  production), which set a new agenda for scientific research and is instrumental in
  bringing about progress

Question 13

Can culture explain the European take-off

Enlightenment

Answer 13

The Enlightenment called on human beings to trust themselves and have the resolution to reject antiquated cultural traditions. It encouraged the development of a more sceptical, empirical and flexible approach towards the world, in the hope of creating a new culture founded not on a faith in the traditions of the past but on the belief that a better world could be built through scientific, technological and institutional progress.

1. in other socities cultural norms did not value individual freedom as much as in Dutch republic or Britain - those people promoted economic growth
2. liberty became more important to elites
3. Europe had the best of all possible worlds between political fragmentation and
   intellectual unification. It was diverse and pluralistic, yet it was intellectually
   “integrated” in that there was a more or less unified market for ideas

Question 14

Culture and the transition from stagnation to growth

Protestant Reformation

Max Weber Hypothesis

Answer 14

Becker and Woessmann (2009) find a strong positive relationship
between Protestantism and school enrollment in 19th c. Prussia - Protestant regions of Germany were richer than Catholic regions

because they learnt how to read the bible they learnt how to read and write as well - wasn’t with the intention to increase human capital accumulation it was just the culture

Question 15

Culture and the transition from stagnation to growth

Catholic Church

Answer 15

undermined kin ties by forbidding marriages between cousins

this fostered greater individualism, less conformity (which is good for economic growth as you would want to differ from your peers incentivising innovation) in Malthusian Epoch

Delayed transition form stagnation to growth because of its effects on fertility

Question 16

Cultural change and economic development

What did the demographic transition mark

Answer 16

The escape from Malthusian stagnation:
the moment where technological progress, higher economic growth does not lead to higher fertility but instead leads to lower fertility and higher education

Question 17

Cultural change and economic development

The cultural origins of the demographic transition

France

Answer 17

Blanc (2023) argues that backlash against religious authorities holding monopoly on faith and against absolutist,
divine-right monarchy that granted a monopoly on faith to the Catholic Church during
the Counter Reformation caused France to secularize first. This in turn left to a decline in fertility.

Although they lost their political power Franec was able to grow as fast as England because France increased (Y/L) because of limiting the increase of L whereas in England and Wales Y increased because technological progress however wasn’t growing as much because of high fertility levels and Malthusian Trap

Question 18

The cultural origins of the demographic transition - how did culture change people’s attitudes

Answer 18

• Culture has shaped the degree of trust we have in each other as well as in political and financial institutions, fostering social capital and cooperation.
• It has formed our inclination towards future-oriented behaviour, affecting saving, human capital formation and technological adoption, and it has affected the way we have perceived transformative ideas and paradigm shifts

Question 19

Why does culture matter for economic development

Answer 19

culture made people embrace the growth-enhancing values of individualism and secularism: a belief that the individual should have the right to shape their own destiny, without social or even religious constraints.
These cultural transformations were also instrumental in establishing political and economic institutions that were conducive to further technological progress. And as the pace of technological and social change intensified, these new cultural norms and institutional structures became even more advantageous.

Question 20

Barriers to the diffusion of development

Answer 20

divergent historical paths led to cultural barriers between them, the greater the barriers, the more difficult it is for innovations, institutions and behaviours to spread

Question 21

Example to barriers to the diffusion of development

Answer 21

if you were linguistically close to france you will face less barriers to the spread of the fertility declines, the spread of innovation during time of demographic transition

Question 22

Why do some cultural traits persist or change rapidly

Answer 22

• When a shift in cultural characteristics has led to economic success, that change seems to have taken place more quickly. But since on the whole cultures evolve more slowly than technology, especially in the past few centuries, it is likely that in some societies cultural traits have been and may still be a barrier to development

Question 23

Summary of Cultural traits

Emergence

Answer 23

cultural traits emerge from myriad factors, predominantly as an adaptive response to our habitat.

Adjustments in that environment, whether in the form of new institutions, technology, the arrival of new crops, trade or migration, have had a major impact on the emergence and endurance of new cultural traits.