Until recently, economists have been reluctant to rely on culture as a possible determinant of economic phenomena. Much of this reluctance stems from the very notion of culture: it is so broad and the channels through which it can enter the economic discourse so ubiquitous (and vague) that it is difficult to design testable, refutable hypotheses. In recent years, however, better techniques and more data have made it possible to identify systematic differences in people's preferences and beliefs and to relate them to various measures of cultural legacy. These developments suggest an approach to introducing culturally-based explanations into economics that can be tested and may substantially enrich our understanding of economic phenomena. This paper summarizes this approach and its achievements so far, and outlines directions for future research.

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Does culture affect economic outcomes

In the last decade, economists have produced a considerable body of research suggesting that the historical origin of a country's laws is highly correlated with a broad range of its legal rules and regulations, as well as with economic outcomes. We summarize this evidence and attempt a unified interpretation. We also address several objections to the empirical claim that legal origins matter. Finally, we assess the implications of this research for economic reform.

/pdf/the-economic-consequences-of-legal-origins-3phhiol1rf.pdf

The Economic Consequences of Legal Origins

Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual self determination. To isolate the exogenous variation in culture, we rely on two historical variables used as instruments: the literacy rate at the end of the 19th century, and the political institutions in place over the past several centuries. The political and social history of Europe provides a rich source of variation in these two variables at a regional level. The exogenous component of culture due to history is strongly correlated with current regional economic development, after controlling for contemporaneous education, urbanization rates around 1850, and national effects. (JEL: O10, F10, P10, N13)

https://www.ifs.org.uk/conferences/tabellini.pdf

Culture and institutions: economic development in the regions of europe

Schumpeter’s canonical depiction of the entrepreneur as an agent of social and economic change implies that entrepreneurs are especially sensitive to the social environment. We use an organizing framework based on institutional economics, in combination with lessons from cross-cultural psychology, to consider the social dimensions of entrepreneurship. The level and modes of entrepreneurial activity are affected by the surrounding culture and by legal rules. Entrepreneurs may partially overcome institutional deficiencies by relying on social networks that facilitate reputational bonding as a means for resource-sharing.

https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=824844

The Social Dimensions of Entrepreneurship

A growing body of empirical work measuring different types of cultural traits has shown that culture matters for a variety of economic outcomes. This paper focuses on one specific aspect of the relevance of culture: its relationship to institutions. We review work with a theoretical, empirical, and historical bent to assess the presence of a two-way causal effect between culture and institutions. ( JEL D02, D72, I32, J12, Z13)

https://www.econstor.eu/bitstream/10419/114123/1/dp9246.pdf

Culture and Institutions

https://www.faculty.idc.ac.il/licht/CR.pdf

Culture rules: The foundations of the rule of law and other norms of governance

https://www.faculty.idc.ac.il/licht/CLCG.pdf?origin=publication_detail

Culture, Law, and Corporate Governance

This article advances a new framework for investigating a simple yet fundamental question: In what ways does the law on the books reflect cultural values? We analyze relations between indices of investors' legal rights - as coded by La Porta et al. (LLSV) - and national cultural profiles. These indices correlate with cultural priorities that are consistent with societal acceptance of litigation. Indices of formalism in civil procedure exhibit similar correlations. Such societal stance may be related to a heritage of British rule. Grouping countries according to legal families - the cornerstone of LLSV's legal approach - provides only a partial depiction of the universe of corporate governance regimes. Our findings cast doubt on the alleged general supremacy of statutes in common law countries. These findings have implications for understanding diversity and convergence in corporate governance systems and for a systematic analysis of the interface between law and social institutions.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID508402_code43182.pdf?abstractid=508402&mirid=1&type=2

This study presents evidence about relations between national culture and social institutions. We operationalize culture with data on cultural dimensions for some 50 nations adopted from cross-cultural psychology and generate testable hypotheses about three basic social norms of governance: the rule of law, corruption, and democratic accountability. These norms correlate systematically and strongly with national scores on cultural dimensions and also differ across cultural regions of the world. Using a linguistic variable on pronoun drop as an instrument for cultural emphases on autonomy versus embeddedness points to a significant influence of culture on governance. Using cultural profiles of a previous generation as an instrument indicates relative stability of cultural orientations and of their correlates. The results suggest a framework for understanding the relations between fundamental institutions.

/pdf/culture-rules-the-foundations-of-the-rule-of-law-and-other-w62kvz2yuk.pdf

Culture Rules: The Foundations of the Rule of Law and Other Norms of Governance

/pdf/culture-law-and-finance-cultural-dimensions-of-corporate-1c5q9sx6k6.pdf

Chanan Goldschmidt

Papers

Culture rules: The foundations of the rule of law and other norms of governance

Culture, Law, and Corporate Governance

Culture, Law, and Corporate Governance

Culture Rules: The Foundations of the Rule of Law and Other Norms of Governance

Culture, Law, and Finance: Cultural Dimensions of Corporate Governance Laws - eScholarship