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Tuesday, November 5, 2013

Culture – Economics – Development – Psychology – Sociology – Behavioral Economics

Culture – Economics – Development – Psychology – Sociology – Behavioral Economics

Introduction 
OK – if that doesn’t drive the Google search engine crazy, nothing will. If you have been following along here at all, you would know by now that I am fascinated by all of the topics above. A few years ago, I did a little piece on how the culture of a nation affects its economic development.
 http://carlscheider.blogspot.com/2011/01/culture-and-developing-nations.html

I continue to pursue this topic, because, much to my utter amazement, everyone does NOT agree with this thesis – that culture, or better, the way people think about the world, has any effect at all on their prospects for economic development.  The biggest problem is that people are generally using the word “culture” as a large, very inclusive concept including history, dance, food, language, etc.  When I am using it in terms of its impact on economic development, I am speaking of the “world view” that one carries around in one’s head as a part of one’s cultural heritage.  Simply by failing to make this distinction, folks get lost in this discussion. For clarity, for the future, when I am talking about “culture” and economic development, I will use the term “culture or world view”.

There are a multitude of examples where the failure to make this distinction utterly confuses the discussion.  I refer to this article by Amartya Sen from 2010.  He is a Nobel Prize winning economist, and he is describing the utter failure of this “grand” theory of development as influenced by culture.  Culture and Development by Amartya Sen:
http://info.worldbank.org/etools/docs/voddocs/354/688/sen_tokyo.pdf.

The Sen article is from 2000, so it may be a bit dated. Generally I like the way Dr. Sen thinks.  His book Development as Freedom is an excellent exposition of how a good social infrastructure supports development. In that book, he also explores in depth the real human benefits that come with economic freedom, far beyond our propensity to acquire more things. BUT it appears to me that he really fails to grasp the real power of culture. He tends to equate culture with the broader concept of dance, religion and history of a people – not to HOW people think. How we view life governs what we do in a very powerful way. That “how” is formed by our history and language and other cultural components, but it is itself the key thing. And it does not change easily. If we want to deal with people immersed in a cultural world view, we will be a lot more successful if we understand that world view and work within it. Trying to change theirs to ours is a recipe for failure. Most economists and sociologists and the like do not GET it. Most do not understand just how powerful the world view is. So I continue to pursue the idea and search for additional proof.

A similar “misconception” of the idea of culture and development is found in this larger summary of the literature:  http://www.unesco.or.kr/eng/front/programmes/links/6_CultureandDevelopment.pdf

Well, I have found a few more things that indicate to me that this is the right way to think about this stuff, thank you very much.  That is the purpose of this entry.

Research and the Convergence of Ideas via the Internet
This is a bit of a digression.  If you want to see the new research, just skip ahead.

This search for interesting things on culture and development is greatly facilitated these days thanks to some tools available on the Internet. One in particular has proven to be very useful – Zite. It’s an “APP”, available on iPhone and Android. You prime it a bit, and it goes off and finds information that it thinks will be of interest to you. You score the articles it finds – thumbs up or thumbs down. It notes that, stuffs it into its Bayesian probability engine, and next time, it presents things that are closer to your interests. It is a highly personalized daily magazine! It’s just like Pandora – the personalized radio station. You tell Pandora if you like a song or not, it notes the attributes of that song and adds it to your profile. It then searches for things with similar characteristics. It’s a big Bayesian probability engine. Google’s translation engine is the same. It was primed with as many translations as they could find, and it just runs the probabilities. It works pretty well.

When I was in graduate school and later in law school, ALL research was done the hard way. I went to libraries, explored printed magazines and books and indexes. If it was not printed on paper, I would never see it. In a few instances, I found a reference to an unpublished work – someone’s doctoral dissertation on a topic – and I could order a printed copy of that – at no small expense. But today, ALMOST everything is available on line. And there is this wonderful probability analysis available so I do not have to actually look at all this stuff. As I find things that are related to my interests, they conspire together to push more things at me.

I think this holds out great prospects for the advancement of human kind. In the past, some ONE person might know ONE important thing – but it was extremely hard to relate that thing to everything else we know. Now – it happens all the time.

A Google Opportunity
I am still amazed that Google has not jumped on this with both feet. The Google eReader service used to gather together all of the feeds to which I subscribe. (I use Feedly these days). But it did not let me score the articles which I choose to read. Zite does that, and goes beyond my subscriptions to find new sources. It frequently serves up something that was just published a few hours ago.

Books – limited availability
There is also the problem that a lot of really good information is in books – and they are NOT searchable. Authors have to make a living, so the books cannot simply be available for free. BUT, if the contents were searchable, we could find things we might be willing to buy. I know Google is working on that, but the publishers are still resisting. For the moment, I have to depend on reviews or summaries of books and unpublished papers. This has given me a whole library of books that I am going to read eventually. I am trying to return the favor by posting comments that point to books that I have read with enough detail that someone else can find the key ideas.

Sociology and Psychology and Economics and Geography – a journey
The problem with the scientific method is that it tends to divide and conquer, but it rarely integrates. To get a doctorate, you focus on one small area, and end up knowing more about that than anyone else on the planet. It’s like climbing this big mountain, and when you get to the top, you look up and realize that you are just at the top of a tiny foothill, and the whole of human knowledge is that mountain range ahead of you. When you do research, you focus on a small area so that you can really understand it well. But that has a tendency to myopia. It is hard to step back and see the big picture, and how your area of expertise relates to other fields.

For example, a number of years ago, I had the good fortune to stumble on a series of books which led me to On Human Nature by Edward O. Wilson. He is a biologist, famed for his studies of ants. His book is a work in Socio-Biology, a nice integration of the two. He uses his biological knowledge to identify traits in humans that he believes are rooted in our biology by evolution. Things like – we are hierarchical, social, we like strong leaders, we are black and white thinkers, etc. I found those things fascinating to help understand just how people operate.

Then I had the good fortune to travel to Africa, and meet some people who pushed me to read Guns, Germs and Steel by Jared Diamond. He is a geographer. The book explains how parts of the world developed differently based on the availability of small grains, animals that could be made beasts of burden, etc. The African experience also pushed me to research “culture” a bit more, and I stumbled on Cultures and Organizations, by Geert Hofstede – a sociologist. This led me to Harrison, Culture Matters, and other works. These people are sociologists for the most part, but they have discovered that the inner workings of human brains, or our culture or world view, influences the way our world of economics and politics works.  Did you ever wonder why Latin America’s experience with democracy is so different than that of the US or Western Europe?  And if you think the Arab states are going to be free market democracies any time soon, I have news for you.

More recently, I happened on Thinking, Fast and Slow by Daniel Kahneman, a psychologist! He won the Nobel Prize in Economics for explaining how people really make economic decisions! This has moved economics as a science from purely abstract theories, to an experimental approach that studies how people really do make decisions. It’s called behavioral economics. This goes hand in glove with a fine little book, Poor Economics which is really a sociological / behavioral economics look at poverty in developing nations!

Back to Psychology
If you are still following along here, I have found yet another integration (thank you Zite), from the field of psychology. This study makes it VERY clear that people raised in different cultures really do think very differently. The authors of this study do not draw any conclusions with respect to their economic systems or forms of government – but the implications are pretty clear to me.

This work summarizes many psychological experiments across different cultures – after the pattern of Kahneman’s book, Thinking, Fast and Slow. It concludes that our thinking and decision making varies widely across different cultures. You can find a summary article on the research here: http://www.psmag.com/magazines/pacific-standard-cover-story/joe-henrich-weird-ultimatum-game-shaking-up-psychology-economics-53135/ (Ethan Waters).

The entire study can be found here: http://www.psmag.com/magazines/pacific-standard-cover-story/joe-henrich-weird-ultimatum-game-shaking-up-psychology-economics-53135/. I do not recommend reading this – it is long and scientific, you know.  The summary cited above is a lot more readable.

The primary point of this paper is that while most psychological research is done with Western graduate students, it turns out that these subjects are “WEIRD” – Western Educated Industrialized Rich and Democratic. These attributes are fairly rare in the rest of the world. Most of human kind do not work this way at all, yet most psychological research tries to draw absolute rules about behavior from this small pool.

For myself, the key thing is that culture, or world view, changes the way people make decisions – decisions about what to buy, how to make a business deal, what is fair, ethical, etc.  I am not making this up.  People from different cultures have very different results.  If your language has a distinct future tense, you tend to save more. See this PDF paper:
  http://www.anderson.ucla.edu/faculty/keith.chen/papers/LanguageWorkingPaper.pdf

Your native tongue tends to influence a LOT of things about how you think about the world. A popular SF author, Ian M. Banks, envisioned a very advanced human culture into the distant future, called “The Culture”. One of the key things this society did was to create a completely new language. They consider any “evolved” language to be dangerous, fraught with emotions and irrational perspectives. I think he is on to something. For some detailed discussion of this, see: The Player of Games.

If you are raised in the US, you are more tolerant of risks than almost anyone else on the planet. You also think you are in charge of the planet, but that is a different problem.  We tend to think that our understanding of “fairness” is a universal truth.  But that is simply not the case.  Other peoples see fairness as a very different problem.  They are much more community oriented than our individualistic or competitive approach to the problem.

The authors provide some nice balance in terms of the “good and bad” about culture. Most people, including people in other cultures, assume that people from this “weird” culture have a positive advantage when it comes to economic and social development. It does appear that there are parts of this particular world view that are well adapted to democracy and market based economics. But there are other parts of this Western culture that are seriously deprived when compared to other cultures.

  • "In their paper the trio pointed out cross-cultural studies that suggest that the “weird” Western mind is the most self-aggrandizing and egotistical on the planet: we are more likely to promote ourselves as individuals versus advancing as a group. WEIRD minds are also more analytic, possessing the tendency to telescope in on an object of interest rather than understanding that object in the context of what is around it. "
    "The WEIRD mind also appears to be unique in terms of how it comes to understand and interact with the natural world. Studies show that Western urban children grow up so closed off in man-made environments that their brains never form a deep or complex connection to the natural world." (Ethan Waters)

I love it –westerners are the ones with the “weird” way of looking at things.

Insights
This approach has some great insights, such as:

  • "Henrich suggests that his research about fairness might first be applied to anyone working in international relations or development. People are not “plug and play,” as he puts it, and you cannot expect to drop a Western court system or form of government into another culture and expect it to work as it does back home. Those trying to use economic incentives to encourage sustainable land use will similarly need to understand local notions of fairness to have any chance of influencing behavior in predictable ways." (Ethan Waters)

I would certainly agree. Another great insight:

  • "Markus and Kitayama suggested that different cultures foster strikingly different views of the self, particularly along one axis: some cultures regard the self as independent from others; others see the self as interdependent. The interdependent self—which is more the norm in East Asian countries, including Japan and China—connects itself with others in a social group and favors social harmony over self-expression. The independent self—which is most prominent in America—focuses on individual attributes and preferences and thinks of the self as existing apart from the group". (Ethan Waters)

Community Based Development
At this point, you are saying – “So What!”

These authors have used specific experiments that clearly document how people think differently. So it turns out I am not making this up, as Dave Berry would say! What is not clear is just how this impacts economics or politics. The key insight is that one cannot simply import your own culture’s system of incentives or checks and balances and expect it to work someplace else. The only viable approach is to work within the culture, with the people, and help them discover what it is that they can accomplish that will work for their world. That would be called community based development, I believe. For which, see this older post: http://carlscheider.blogspot.com/2011/12/community-based-development.html

Thanks for reading this far. I doubt many of you did, but  . . . that’s part of life and clearly my major problem. Too darned many words.
Take care. Now if I can just get Amartya Sehn to read this. I wonder if he has a Google search on his name like I do?