Two Economics Papers About Culture

30 August 2010 at 9:23 am 5 comments

| Peter Klein |

The New Institutional Economics focuses mainly on formal rules, both “macro” (constitutions, legal systems, written languages) and “micro” (firms, contracts, other formal agreements). But there are many studies of informal or semi-formal constraints — norms, conventions, religion, belief systems, and other aspects of culture, broadly conceived. Given their commitment to methodological individualism, New Institutional Economists tend to explain the emergence and stability of these phenomena as the consequences — typically unintended — of purposeful individual choices (which distinguishes us from our colleagues on the other side of the aisle). (Culture is important within organizations, as well as between them, though attempts to explain organizational culture in this manner have been less successful.)

Does Culture Matter?
Raquel Fernández

This paper reviews the literature on culture and economics, focusing primarily on the epidemiological approach. The epidemiological approach studies the variation in outcomes across different immigrant groups residing in the same country. Immigrants presumably differ in their cultures but share a common institutional and economic environment. This allows one to separate the effect of culture from the original economic and institutional environment. This approach has been used to study a variety of issues, including female labor force participaiton, fertility, labor market regulation, redistribution, growth, and financial development among others.

Do Social Connections Reduce Moral Hazard? Evidence from the New York City Taxi Industry
C. Kirabo Jackson, Henry S. Schneider

This study investigates the role of social networks in aligning the incentives of economic agents in settings with incomplete contracts. We study the New York City taxi industry where taxis are often leased and lessee-drivers have worse driving outcomes than owner-drivers as a result of a moral hazard associated with incomplete leasing contracts. Using instrumental variables and fixed-effects analyses, we find that: (1) drivers leasing from members of their country-of-birth community exhibit significantly reduced effects of moral hazard; (2) network effects appear to operate primarily via social sanctions; and (3) network benefits can help to explain the organization of the industry in terms of which drivers and owners form business relationships.

Entry filed under: - Klein -, Institutions, New Institutional Economics, Recommended Reading, Theory of the Firm.

Department of “Duh” How to Read an Academic Article

5 Comments Add your own

  • 1. k  |  30 August 2010 at 12:43 pm

    This can help in future research about culture:

  • 2. srp  |  30 August 2010 at 1:56 pm

    The first abstract repeats itself halfway through.

  • 3. Peter Klein  |  30 August 2010 at 1:58 pm

    Thanks, that was my formatting error, not the author’s. Now fixed.

  • 4. Bogdan Enache  |  30 August 2010 at 2:24 pm

    I don’t think economists have much of a working concept of culture. In the 19th century, when the idea of culture emerged in the social sciences, particularly in the German environment, it was openly opposed to institutions, meaning the emancipative set of rational rules and principles popularised by the Enlightenment philosophers. The distinction between culture and institutions was in a way a precursor of the Marxist distinction between infrastructure and suprastructure, but for the 19th century and early 20th century social scientists the cultural infrastructure was a force of opposition to institutions as commonly understood, something that escaped them and which tended to make them ineffective and shape them in a different way. This idea of culture never really caught on in economics, despite the widespread recognition of Weber’s work, and even those who sort of pursued this line of thinking, like the American Institutionalists used the concept of institutions, although in the German/European environment this meant culture.

  • 5. Cultura importa? « De Gustibus Non Est Disputandum  |  1 September 2010 at 4:09 pm

    […] vezes aqui. Creio que o leitor interessado encontrará muito material se fizer uma busca pelo blog. Mas eis novos textos sobre o tema. […]

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