Cultural differences between countries are quite large, and likely affect differences in economic development. But how did these differences arise in the first place? Consider recent history: it’s not a stretch to believe that Europeans who immigrated to the US were generally individualistic, adventurous, entrepreneurial people who potentially did not fit in well with their existing society; they were possibly non-conformist, less obedient that those who stayed.
Values such as individualism, innovativeness and entrepreneurialism gave these immigrants an edge in the longer term, and this made the US very successful, even relative to Europe. Can such a story apply over the much longer term? Can it explain how cultures diverged thousands of years ago?
When we compare the economic performance of former colonies with high European populations (e.g. Australia) to those without one (e.g. most African and Latin American countries), we can see that the former are generally more successful. One reason behind this is that Europeans already knew how to make an economy successful when they settled down in those colonies. They then transferred this knowledge to their offspring. Such an intergenerational transmission of traits that are favorable to development was missing in colonies with few Europeans.
One question that may arise is what kind of knowledge/traits are we talking about here? And is it transmitted genetically or culturally? Of course, economic development has many other determinants, but such intergenerationally transmittable traits are very important as well. In this post, I’ll look at the case of novelty-seeking traits: that is whether one likes to explore and try new things.
Parental wealth transmission to children can take many forms. Primogeniture refers to a preferred (usually first-born) child getting all the wealth, whereas a completely egalitarian transmission would mean each child getting the same share. Then there is everything in-between.
Which one of these societies tended towards historically varied quite a bit by time and place. Surely, there are cultural and historical reasons for this. But there are also economic ones.
Why do certain immigrant groups tend to assimilate, while others don’t? This post argues that immigrant institutions (such as religious communities or foreign language media) have an important role in determining the degree of assimilation.
Moreover, altruistic institutions (those who care about their group’s identity and wealth) and extractive institutions (those who only care about the group’s identity to the extent that it increases their own revenue) may have different effects.
The rate of time preference or in other words long-term orientation has been found to be an important determinant of human behavior. Generally, it is associated with better educational outcomes, and even better physical and emotional health. On an aggregate level it can affect differences in GDP across countries.
This post presents a new paper that asks how differences in time preference arose. Clearly, we see substantial variation in time preference across countries, so the question is what caused this.
Genetic diversity is an interesting phenomenon. Too little of it and the population can be too homogeneous, too much of it and there will be a lot of mistrust and conflict. This exactly sounds like something that could potentially influence economic development, doesn’t it?
Research on genetic diversity’s effect on development is quite new. It started with Ashraf and Galor’s (2013) paper, which established the pattern described above: that there is a hump-shaped relationship between genetic diversity and development. Some remain skeptical, however. So let us look at a new take at this question.
For most of history, humans have actually been hunter-gatherers. Specifically, if we assume that “modern” humans started with the cognitive revolution about 70,000 years ago, then we’ve roughly spent 85% of our time on Earth as foragers.
It is now a largely accepted fact among historians that hunter-gatherers actually had better, healthier diets, they worked less and their lives in general were much more enjoyable. At least when you compare them to early agriculturalists. Then what made us change our minds about hunting and gathering? And why did it not happen at the same time everywhere?