Tyler Cowen: belief

Transcript context

…[laughs] Good point. I hadn’t thought of it that way, but yes. Literature as a whole, arguably, makes one believe more in what would sometimes be called a cultural backwardness theory of economic underdevelopment. There’s something in Dubliners about the perspectives people have on situations. They’re remarkably local, and they’re keen, and they’re perceptive, and they’re highly emotional, but the arc at which people make comparisons, typically, is a very small circle. Ireland, when it joins the EU and even before then — it’s changing that, I think. Yes. It’s a great point. As an undergraduate, I didn’t study economics. I did a program called social studies. We read Weber among other people. Weber talked about the role of culture in influence and economics. A lot of modern development economics was a reaction to that, perhaps a warranted reaction. I think Weber himself, obviously, may be wrong, but very sophisticated, not simplistic. But there was a lot of simplistic analysis of “Confucian societies will never grow.” Or “Hindu rate of growth is inherently low.” So people were making, clearly, statements that were just wrong. It turned out to be wrong. Even before the head economist said, “Look, we don’t need to” . . . the founding of modern development economics would say that the people are poor but rational. We can use the same tools of economics to analyze people in low-income countries as high-income countries. I think there’s a lot to be said for that. But what we’ve realized with behavioral economics is that people in high-income countries are not completely rational either, and there are certain patterns in the way that they’re not rational. Those things can play out differently in low-income countries and high-income countries just due to different institutions. But what you’re suggesting is something much stronger than that — that there can be certain ways of thinking embodied in culture. Those are interesting ideas, and people like Nathan Nunn or Alberto Alesina are doing very exciting work on culture and economics. We have a lot more to learn about how far we can take that, but I think there’s exciting work going on in that area. We have to be careful and avoid some of the simplistic approaches of the past. I also think — just to come back to this point about convergence — one of the things a lot of the work on economic history, and on culture in particular, has emphasized is just how long-lasting things are. Whether societies used to plow thousands of years ago affects society today. That’s the claim. I’m very open to those ideas, but what we’ve also seen is low-income countries really catching up — and remarkably quickly — to higher-income countries. That suggests that we shouldn’t take talking about culture as indicating that there’s no possibility for development or for change. There’s clearly that possibility. We’ve seen that in country after country.…

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