Economics of Culture and Institutions

A conference on Economics of Culture and Institutions took place on April 27-28 in Cambridge. Research Associates Alberto Bisin of New York University and Paola Giuliano of University of California, Los Angeles organized the meeting. These researchers' papers were presented and discussed:

Benjamin Enke, Harvard University and NBER

Kinship Systems, Cooperation, and the Evolution of Culture (NBER Working Paper No. 23499)

Cultural psychologists and anthropologists argue that societies have developed heterogeneous systems of social organization to cope with social dilemmas, and that an entire bundle of psychological and biological characteristics has coevolved to enforce cooperation within these different regimes. In this paper, Enke develops a measure of the tightness of historical kinship structures to provide empirical evidence for this large body of theories. In the data, societies with loose ancestral kinship ties cooperate and trust broadly, which appears to be sustained through a belief in moralizing gods, universal moral values, internalized guilt, altruistic punishment, and large-scale institutions. Societies with a historically tightly knit kinship structure, on the other hand, exhibit strong in-group favoritism: they cheat on and distrust out-group members, but readily support in-group members in need. This cooperation regime is enforced by tribalistic moral values, emotions of external shame, revenge-taking, conformity to social norms, and strong local institutions. These relationships hold across historical ethnicities, contemporary countries, ethnicities within countries, and among migrants. The results suggest that religious beliefs, moral values, social preferences, emotions, social norms, and institutions all coevolved to support specific social cooperation systems.

Daniel L. Chen, Institute for Advanced Study in Toulouse; Elliott Ash, University of Warwick; and Suresh Naidu, Columbia University and NBER

Ideas Have Consequences: The Impact of Law and Economics on American Justice

Chen, Ash, and Naidu provide a quantitative analysis of the effects of the law and economics movement on the U.S. judiciary using the available universe of opinions in U.S. Circuit Courts and 1 million District Court criminal sentencing decisions linked to judge identity. The researchers estimate the effect of attendance in the controversial Manne economics training program that 40% of federal judges attended by 1990. To isolate the effect of judges from the types of cases they face, the researchers exploit random assignment of judges to control for court- and case-level factors, an exogenous seating network from random panel composition to trace the spread of economic reasoning in law, and ordering of cases within Circuit to identify general economic ideas that move across legal topics. They use natural language processing methods to quantify the influence of economics in written judicial opinions. Descriptively, they find that judges who use law and economics language vote for and author conservative verdicts (as coded by Songer-Auburn) in economics cases and are more opposed to government regulation. After attending Henry Manne's economics training program, participating judges use more economics language and render conservative verdicts in economics cases, rule against regulatory agencies, particularly in labor and environmental cases, get cited more and increase dissents. These results are robust to a large set of judge biographical controls, and do not exist prior to Manne program attendance, suggesting a causal effect of economics training on judicial decisions. Further, Manne economics training is more predictive of these decisions than appointing political party. The researchers further document a number of indirect channels of economics influence on the law beyond the direct effect on Manne program participants. Non-Manne judges exposed to Manne peers on previous cases increase their use of economics language in subsequent opinions. Further, some economics concepts are portable across legal contexts: "general-purpose" economics phrases such as "capital", and "efficiency" move across legal topics within a judge. Economic reasoning diffused from regulatory domains into criminal law. Consistent with this, law and economics influenced criminal decisions: Circuit Court judges that attend the Manne program and use more economics language are more likely to reject criminal appeals, and this effect spills over onto non-Manne judges serving on the same panel. Moving to district courts, and using variation in judicial discretion generated by U.S. v. Booker, the researchers find Manne judges render 20% harsher (10 months longer) criminal sentences after this ruling, which allowed more judicial sentencing discretion. Finally, they document that Manne attendance is more predictive of racial and gender sentencing disparities than party of appointment, and Manne judges in both Circuit and District Courts render harsher immigration decisions, voting for enforcement of immigration regulation and longer sentences for illegal immigrants.

Sara Lowes, Bocconi University, and Eduardo J. Montero, Harvard University

Blood Rubber

Lowes and Montero examine the legacy of one of the most extreme examples of colonial extraction, the rubber concessions granted to private companies under King Leopold II in the Congo Free State, the present-day Democratic Republic of Congo. The companies used violent tactics to force villagers to collect rubber. Village chiefs were co-opted into supporting the rubber regime, and villagers were severely punished if they did not meet the rubber quotas. The researchers use a regression discontinuity design along the well-defined boundaries of the ABIR and Anversoise concessions to show that historical exposure to the rubber concessions causes significantly worse education, wealth, and health outcomes. They then use survey and experimental data collected along a former concession boundary to examine effects on local institutions and culture. They find a negative effect on local institutional quality and a positive effect on culture. Consistent with the historical co-option of chiefs by the concession companies, village chiefs within the former concessions are more likely to be hereditary, rather than elected, and they provide fewer public goods. However, individuals within the concessions are more trusting, more cohesive, and more supportive of sharing income. The results suggest that colonial extraction may have different effects on institutions and culture.

Jacob Moscona, MIT; Nathan Nunn, Harvard University and NBER; and James A. Robinson, University of Chicago and NBER

Social Structure and Conflict: Evidence from Sub-Saharan Africa (NBER Working Paper No. 24209)

Moscona, Nunn, and Robinson test the long-standing hypothesis that ethnic groups that are organized around 'segmentary lineages' are more prone to conflict and civil war. Ethnographic accounts suggest that in segmentary lineage societies, which are characterized by strong allegiances to distant relatives, individuals are obligated to come to the defense of fellow lineage members when they become involved in conflicts. As a consequence, small disagreements often escalate to larger-scale conflicts involving many individuals. The researchers test for this link between segmentary lineage and conflict across 145 African ethnic groups in sub-Saharan Africa. Using a number of estimation strategies, including an RD design at ethnic boundaries, they find that segmentary lineage societies experience more conflicts and ones that are longer in duration and larger in scale. The researchers also find that the previously-documented relationship between adverse rainfall shocks and conflict within Africa is only found within segmentary lineage societies.

Klaus Desmet, Southern Methodist University, and Romain Wacziarg, University of California at Los Angeles and NBER

The Cultural Divide (NBER Working Paper No. 24630)

Desmet and Wacziarg conduct a systematic quantitative study of cultural convergence and divergence in the United States over time. Using the General Social Survey (1972-2016), they assess whether cultural values have grown more or less heterogeneous, both overall and between groups. Groups are defined according to 11 identity cleavages such as gender, religion, ethnic origin, family income quintiles, geographic region, education levels, etc. The researchers find some evidence of greater overall heterogeneity after 1993 when averaging over all available values, yet on many issues heterogeneity changes little. The level of between-group heterogeneity is extremely small: the United States is very pluralistic in terms of cultural attitudes and values, but this diversity is not primarily the result of cultural divides between groups. They find evidence of falling between group heterogeneity from 1972 to the mid-1990s, and growing divides after the mid-1990s for some cleavages and some values. They interpret these findings in light of a model of cultural change where intergenerational transmission and forces of social influence determine the distribution of cultural traits in society.

Christian Dippel, University of California at Los Angeles and NBER, and Stephan Heblich, University of Bristol

Leadership and Social Norms: Evidence from the Forty-Eighters in the Civil War (NBER Working Paper No. 24656)

A growing theoretical literature emphasizes the role that prominent individuals play in shaping beliefs and social norms. Dippel and Heblich provide empirical evidence for such `civic leadership.' They focus on the Forty-Eighters, a group of political refugees from Germany's failed 1848 revolutions, and their role in the struggle for the abolition of slavery in the U.S. Their primary outcome is volunteering for the Union Army. Given the enormously high death toll during the Civil War, this measure provides a powerful measure of social convictions against slavery. Using different empirical strategies, the researchers show that towns where Forty-Eighters settled in the 1850s increased their Union Army enlistments by three per hundred adult males over the course of the war. Detailed biographical information allows the researchers to distinguish intellectual 'fighting' leaders, the former appear to have exerted their influence through publishing, the latter through the formation of local social clubs, but it was the fighting leaders who really drove people to enlist. Using machine learning techniques to infer soldiers' ancestry, the researchers find that the Forty-Eighters had the biggest impact on the enlistment of German Americans, moderate impact on American men, and no impact on the enlistment of Scandinavian, Irish and Italian men. This differential effect carried over into the field of battle: A Forty-Eighter in their hometown decreased soldiers' likelihood of desertion, but only for those of German ancestry.

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