DP6589 Culture and Institutions

Author(s): Guido Tabellini

Publication Date: November 2007

Keyword(s): culture , growth , institutions , political economics

JEL(s): A10 , D7 , E00

Programme Areas: Development Economics , International Macroeconomics , Public Policy

Link to this Page: www.cepr.org/pubs/dps/DP6589.asp.asp

How and why does distant political and economic history shape the functioning of current institutions? This paper argues that individual values and convictions about the scope of application of norms of good conduct provide the "missing link". Evidence from a variety of sources points to two main findings. First, individual values consistent with generalized (as opposed to limited) morality are widespread in societies that were ruled by non-despotic political institutions in the distant past. Second, well functioning institutions are often observed in countries or regions where individual values are consistent with generalized morality, and under different identifying assumptions this suggests a causal effect from values to institutional outcomes. The paper ends with a discussion of the implications for future research.