Last updated on April 28, 2013
Economists are generally suspicious of explanations for behavior relying on culture. This likely stems from the fact that individual rationality, whose twin assumptions of completeness and transitivity constitute the cornerstone of economics and of much of modern social science, are not context-dependent.
The typical economist’s skepticism regarding culture as an explanation for behavior also stems from the fact that most economists fundamentally believe a human being is a human being the world over, and only economic circumstances change to provide a different set of incentives, which themselves explain variations in behavior. It is in that sense that no matter what its critics might say, economics remains very much a humanistic discipline.
Not only is invoking culture as an explanation for behavior the hallmark of lazy thinking, it is also unscientific. A few weeks ago, Frances Woolley wrote:
In China, there are six boys born for every five girls; the result of an age old preference for sons combined with widespread use of sex selection technology.
It’s tempting to ascribe son preference to culture and leave it at that. However, for an economist, “culture” is a lousy explanation. It has only trivial predictive value. Will the preference for sons persist over time, or will it gradually fade away? Cultural explanations cannot say: culture simply is what it is.
Another problem with “culture” is that it can explain anything. People in Uttar Pradesh select for sons? “It must be their culture. People in Kerala don’t select for sons?” Since “culture” is compatible with any conceivable set of facts, it is not falsifiable.
And, as per Karl Popper, an explanation that is not falsifiable is not scientific.
For the longest time, I shared the stance toward culture I describe above. But then, in preparing the corruption and governance module of my development seminar, I read Fisman and Miguel’s famous article on the parking tickets accrued by UN diplomats in New York City (see here for an ungated copy):
We study cultural norms and legal enforcement in controlling corruption by analyzing the parking behavior of United Nations officials in Manhattan. Until 2002, diplomatic immunity protected UN diplomats from parking enforcement actions, so diplomats’ actions were constrained by cultural norms alone. We find a strong effect of corruption norms: diplomats from high‐corruption countries (on the basis of existing survey‐based indices) accumulated significantly more unpaid parking violations. In 2002, enforcement authorities acquired the right to confiscate diplomatic license plates of violators. Unpaid violations dropped sharply in response. Cultural norms and (particularly in this context) legal enforcement are both important determinants of corruption.
In other words, before 2002, when UN diplomats did not have to pay their parking tickets, a Bangladeshi diplomat,* acting like a textbook homo economicus, would almost never pay her parking tickets. But surprisingly, a Finnish diplomat, acting completely unlike homo economicus, would almost always pay his parking tickets. In other words, diplomats would “import” their cultural norms vis-à-vis corruption.
The Fisman and Miguel paper got a lot of media attention, because it contained a cool, well-identified finding. But I think it did not nearly get the attention it deserved for convincingly making the point that culture, although often used lazily as an explanation for behavior, is not as useless as most economists would like it to be.
* My examples were not selected at random, as they come from the most and least corrupt countries per the 2002 corruption perceptions index.
Nice post. I think one could dispute your initial claim, however, that the assumptions of completeness and transitivity in preference orderings are not context-sensitive. They might be context-sensitive in cases where the individuation of options is context-sensitive. Suppose, for example, that one culture discriminates between doing harm directly and allowing harm to occur, while another culture does not make that discrimination. Now suppose that there are three options in a certain situation: 1) You can help X, but only at the cost of allowing Y to be harmed; 2) You can prevent harm to Y, but at the cost of not helping X; and 3) You can help X by harming Y directly. The person from the culture that discriminates between doing harm and allowing harm will see 1 and 3 as different options, whereas the person from the non-discriminating culture may see them as one and the same option (let’s call this ‘1&3’). The person from the discriminating culture can rationally form a preference ordering (best-to-worst, though the other way around will also work): {1, 2, 3}. But for the person from the non-discriminating culture this would amount to having the preference ordering: {1&3, 2, 1&3}. This violates transitivity, if transitivity means that for all options A and B either A>B (A is preferred to B), or B>A, or B~A (A and B are indifferent). For this is a case where A>B *and* B>A.
The “rational actor” idea always struck me as being similar to the notion of “common sense.” As one of my favorite anthropologists put it: “… for many people and most especially for its champions, common sense is not cultural at all, but the simple truth of things artlessly apprehended; plain fact acknowledged by plain men. Thus, I began ‘Common Sense as a Cultural System’… by arguing, contrary to this (commonsensical) idea, that common sense was a cultural system; a loosely connected body of belief and judgment, rather than just what anybody properly put together cannot help but think.”
“There may be things that anybody properly put together cannot help but think — that rocks are hard and death inevitable. And there are certainly some — that rocks are insentient and death disagreeable — that, though Wordsworth gave a moral life to stones and Fascist thugs shouted vive la muerte at Unamuno, no one much doubts. But common sense has more to do with how to deal with a world in which such things obtain than with the mere recognition that they do so… like piety or legalism (or ethics or cosmology), it both differs from one place to the next and takes, nevertheless, a characteristic form.” (Geertz, Local Knowledge)
Thanks for a thought provoking post!
A Finnish diplomat would be fired for having thousands of unpaid parking tickets while a Bangladeshi diplomat wouldn’t. Both are optimising.
How do we know that those are the consequences? Why would the Finnish embassy folks have such an enforcement? They don’t have to pay those parking tickets at all. And it’s not just Bangladesh and Finland; the relationship between corruption in the home country and unpaid tickets was statistically significant.
[…] at 7:45 on May 1, 2013 by Andrew Sullivan Marc Bellamare thinks economists take an overly simplistic view of it: Economists are generally suspicious of […]
Seems more like the point is that economists are lazy for not measuring culture well not that culture is a lazy explanation. Lots of great examples of measuring culture in a falsifiable way…
Interesting article… thanks…
My take on this (sorry, a community worker, not an economist):
Culture has a huge impact on behaviour. People from different cultures behave in completely different ways in ‘similar’ situations, as the UN parking case shows.
For me, culture is like a shirt, you can’t look at it and know how it feels to wear it. You have to put it on to know how it feels to wear it. And you have to wear it for a long time to not wear it while continually comparing it to your old coat (which maybe no-one in the culture has ever tried on…) which is usually irrelevant to everyone but you…
It would be interesting to hear what people who had worked in micro-finance, real grassroots, community level development workers have to say about the crossroads of culture and economics in different cultural contexts…
This is an interesting discussion for which I have two comments:
1. Regarding culture and corruption, I think this often an economic situation that is well illustrated by the discussion between the Finnish Diplomat and the Bangladesh Diplomat. One coming from an economically developed country and the other from an economically developing country. The latter having what I like to call a suppressed economy, meaning while the cost of living is considerable lower, the wages are even lower thus people have to spend a considerable higher percent of their income for basic survival needs. The result is very limited tax base and a government that is financially stalled. This then results in poorly paid civil officers looking largely for informal income opportunities, a term that politely avoids that horrible “C” word. Please visit my website and webpages for more details:
http://www.smallholderagriculture.com/ .
http://lamar.colostate.edu/~rtinsley/FinancialSuppressed.htm .
http://lamar.colostate.edu/~rtinsley/FinanciallyStalled.htm .
2. I think sometime culture is kind of a luxury in that culture will quickly give way to economics with the correct stimulus which for better or worse tend to be western materialism.
Thank you,
Dick Tinsley