Uncultured Swine
Does culture play a role in economic issues?
If the salt have lost his flavor wherewith shall it be salted?'—that is the tragedy with which I am concerned.
André Gide, “The Counterfeiters” based on Matthew 5:13
This is related to an article of mine published yesterday in Seúl Magazine. Feel free to read it!
People love to talk about how “the vibes” are affecting such and such behavior, outcome, or phenomenon - usually without any evidence at all whatsoever, or with the evidence against them, as seen above. So what’s the deal with using culture, preferences, and overall vibes to account for economic phenomena?
What about the vibes
A while back, Scott Alexander and Noah Smith had something of a debate about why Jewish people were so accomplished compared to regular white Westerners. Smith argues it’s not that pervasive after accounting for selective immigration, urbanity, stuff to do with who gets assigned “Jewishness”, temporary cultural effects, and the fact that most Jewish people live in the West, which is pretty rich and successful. Alexander disputes the first one (most Jewish immigrants to the US were during the first era of mass migration - which had open borders, at least for Europeans) and some portions of Smith’s arguments on the other. I don’t really care (my opinion, as a Jewish person, is that it’s a longstanding emphasis on education and urban residence) except that it’s pretty funny how China and Japan have a whole literature of self-help business books about emulating Jewish success1.
What’s interesting is that basically every immigrant nationality is unprecedentedly successful in the US, per the amazing book “Streets of Gold” by Leah Boustan and Ren Abramitzky. While basically nobody is socioeconomically mobile, the children of immigrants are - even for very low income groups. For basically every single nationality, the children of immigrants at the bottom of the economic scale performed better than their parents, unlike native-born Americans. The one exception are the sons of West Indian immigrants; the West Indies are in the Caribbean, and most people there are Black (or what Americans would call Black, at least). In consequence, while West Indian Americans outperform other Black Americans, they perform especially better when it comes to women (who are also the most upwards mobile group) - because Black men specifically have very high exposure to extremely unpleasant interactions with the police, among other instances of discrimination based on race but not national origin.
The interesting part is that it’s really hard to explain why this is the case. It’s not education, because 1) the effect remains when controlling for it; and 2) the children of immigrants aren’t substantially more educated than their native-born counterparts. This means that immigrants are mobile even if you take out most qualities that explain people’s income - meaning it has to be something you can’t observe. People who move countries are very different, personality wise, than people who don’t; they might have substantially different values that they pass on to their children - for example, an emphasis on academic achievement (which doesn’t actually pan out on results in statistically observable ways, but whatever) Research by the economist Raj Chetty (and others) points to communities being really important: having friends of a different social class results in higher mobility. So immigrant communities being clustered by nationality could mean that doctors, nurses, and janitors from the same country all know each other from growing up, leading to more opportunity for all of them.
Willfully blind?
We also claim, however, that no significant behavior has been illuminated by assumptions of differences in tastes. Instead, they, along with assumptions of unstable tastes, have been a convenient crutch to lean on when the analysis has bogged down. They give the appearance of considered judgement, yet really have only been ad hoc arguments that disguise analytical failures.
It seems that culture and community are a really big component of mobility. But economists tend not to pay much attention to because they’re hard to measure (unless you’re Raj Chetty, then you’ll get a well-deserved Nobel Prize out of it in like 20 years). Why is this?
The first reason is that it is extremely difficult, if at all possible, to verify whether culture and tastes have indeed changed, or what they are, or how to even make sense of any of it. You can, of course, observe prices and quantities, but arguing from them is an old fallacy - and arguing from them about unquantifiable variables is definitely a no-no. Of course, the issue with culture and preferences being unquantifiable is that any peregrination on them is unfalsifiable - so claims that labor force participation is down because of legal weed destroying the American work ethic are obviously unverifiable, especially when alternative hypotheses exist - such as “all the people who retired are part-time workers over 65”, which, besides them not precisely being prime candidates for potheadery, is also borne out from the data. Even when there are somewhat serious attempts to quantify these things, the quantification is often poor, or results in highly contradictory outcomes - as seen in Alex Nowrasteh’s review of Garrett Jones’s The Culture Transplant, an anti immigration book premised on cultural factors primarily.2
Relatedly, the lack of rigor of culture and preference-based economics has resulted in an opening for charlatans and bigots, who want to use the prestige afforded to economics to promote their nonsense. Racists might not want to draw attention to research on the matter in order to ascribe differences in outcomes to “ghetto culture” or whatever other nonsense they can draw up when confronted with facts. And conservatives who want to promote the idea that women do indeed want to give up their careers to become all but servants to their husbands can invoke preferences and culture in order to ignore, for instance, the international evidence to the contrary, as well as the economic logic behind withdrawal and participation from the workforce. Additionally, you can’t use the fact that women exit the workforce at both the intensive and extensive margins after giving birth (i.e. working fewer hours or not working at all) as proof they don’t want to keep working because, for instance, the prevailing wage for mothers might be lower than the cost of childcare, or than the lost wages of the father working (if initial earnings are lower).
The problem is that, back in the 1950s and 60s (the nadir of women’s labor force involvement), women also did indeed show much less interest in a career than they do presently - surveys, for instance, show that the main reason why women attended college was to find a (successful) husband, rather than a career of their own. But, at the same time, the returns to getting a husband through an education were higher than the results of getting a job through an education - so we’re in a case of chicken and egg: either the culture led to reduced opportunities for women, or the reduced opportunities for women shaped the culture. And of course, preferences for socially influenced affairs can’t be separated from the culture, and the culture can’t be separated from government policy itself (for instance, explicit bars on married women working or the legalization of contraceptives). And men whose mothers worked (largely due to the economic conditions of World War Two) supported their wives working, which shapes the culture overall.
Norms vs incentives
This gets to, I think, another issue. Public policy can always be said to be influencing “the culture” even though the results of it are precisely the same behaviors being discussed. A lot of people will say that Americans drive so much because it’s a culturally ingrained practice, so attempts to make cities less car-centric will be futile, even though the exact reason why American cities are so car centric is that the government decided they should be - massive highways and suburbs didn’t spring up everywhere fully formed from the forehead of Zeus, and neither did better planned European cities with functional transit.
It is possible both are at play at once (read above) but the real caveat is that matters of incentives probably trump matters of norms. If it was cheaper to take the bus than to drive, considering time and adjusting for comfort, it would not matter how many advertisements for cool cars Americans saw - they would take the bus instead. Assuming agents can never be influenced to act otherwise is deranged and defeatist; if you do not like a behavior, increase its cost, and if you like it, decrease it. To take a more polarizing stance, abortion restrictions are not bad because of the bad vibes, they’re bad because they lead to fewer abortions than desired by the women who would have them. Disparate impact is a real issue, but it’s not enough to say that some people will be less affected on account of income - rich people can also fly private jets, and it does not mean making the subway work better is a bad idea.
The place where this kind of thing comes up the most is welfare discourse. To opponents, welfare promotes laziness (regardless of any actual evidence whatsoever or the fact that the claim has been made for literal centuries), and when it does not, it damages work culture nevertheless. The problem here is that a lot of the time, the observed undesirable behavior stems from the design of the policy itself. For instance, many welfare programs have extremely stringent income cutoffs, where earning just above them deprives one of any benefit; the result is that recipients simply work less or work worse jobs to not stop receiving the payments, regardless of their actual desired employment. In countries with high labor informality, the adjustment channel appears to be a refusal to take formal employment instead, since even for the same (net) pay and better conditions, overall income would go down if transfer payments would be reduced. So it is possible that a lazy entitled culture is emerging, or that people just don’t want to work anymore, or any trillion other cliches, or it is possible than people prefer more to less. Who could say?
Conclusion
Do people respond to incentives? It appears so. Is it reasonable to expect them to respond to incentives? Yes, then. Are incentives a better explanation for economic behavior than vague handwaving about culture and preferences? If you want any pretension of rigor, and without any compelling evidence, no. Then is attributing things to changes in culture/preferences/vibes a good idea? No, and I emphasize this for the trillionth time, unless you have a good set of reasons why.
This isn’t philosophy 101 so you need actual concrete proof for your grand pronouncements about society, luckily.
Even more hilariously, when the Nazis tried to get Imperial Japan to commit to antisemitism by sending propaganda, they thought it was really cool how Jews ran all the banks and industries in the West and tried to raise Jewish migration to Japan to boost the economy.
Hilariously, the most interesting critique Nowrasteh puts forward is that actually Jones promotes more immigration, since he wants to restrict it from countries that barely send anyone to the US, and increase it from the most heavily restricted ones - India and China.
why is “ghetto culture” not a convincing driver of lack of black mobility?
If you have a single mother and you are raised to glorify drug dealers and rappers, you likely won't strive to study and start companies.
Dismissing this less savory part of the explanation as "racist" does a disservice to yourself, and to your readers