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Library of Congress Cataloging-in-Publication Data
Names: Camasso, Michael J., author. | Jagannathan, Radha, author. Title: Caught in the cultural preference net : three generations of employment choices in six capitalist democracies / Michael J. Camasso, Radha Jagannathan.
Description: New York : Oxford University Press, 2021. | Includes bibliographical references and index.
Identifiers: LCCN 2020033771 (print) | LCCN 2020033772 (ebook) | ISBN 9780190672782 (hardback) | ISBN 9780190672805 (epub) | ISBN 9780190672812
Subjects: LCSH: Labor market—Developed countries—Social aspects—Case studies. | Job vacancies—Developed countries—Case studies. | Generations—Developed countries—Case studies.
Classification: LCC HD5706 .C246 2021 (print) | LCC HD5706 (ebook) | DDC 331.1—dc23
LC record available at https://lccn.loc.gov/2020033771
LC ebook record available at https://lccn.loc.gov/2020033772
DOI: 10.1093/oso/9780190672782.001.0001
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For Carol Ann who passed on much too soon but whose life on this earth endures uninterrupted in our thoughts
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Preface
As the title of this book suggests, we focus our attention on the role that culture—the amalgam of values, beliefs, preferences, and attitudes responsible for national identities—has played and continues to exert on individuals’ decisions to participate in the labor market. At a time when millennials face many employment challenges and Generation Z can be expected to encounter even more, a clearer understanding of the ways cultural transmission could facilitate or hinder productive and rewarding work would appear to be both useful and well-timed.
The book’s title conveys our aim to determine if work-related intentions and preferences have remained stable across generations in six democracies or if they have been altered by changing economic conditions. While millennials serve as the anchoring point for much of our discussion and analyses, we do not neglect the significance that their parents from Generation X (b. 1965–1982) and grandparents from the baby boom (b. 1945–1964) have had in their socialization.
One of our principal methods for isolating the effects of cultural and cultural transmission is what is referred to as the stated choice experiment. We conducted a stated preference experiment with family members from each of these three generations with the purpose of identifying the type(s) of employment that maximizes individual utility (values) for engaging in work. We expand our examination of intergenerational variation by placing it in a comparative context; for example, we replicate our experiment in six countries selected to maximize variation in the social and governmental conditions under which a market economy operates. In selecting countries we drew heavily upon Gosta Esping-Andersen’s (1990, 2002) typology of welfare capitalism with Sweden providing our representative of social democratic capitalism; Germany, the model for corporatist ordoliberalism; Italy and Spain, countries where the market economy is backstopped by family; and the United States and India, examples of free market liberalism. By nesting cross-generational experiences within a cross-national context, we believe we have significantly increased our capacity to disentangle cultural determinants from the economic causes of employment preference.
Preface
Our cross-generational experiments in each of these countries are augmented with survey data detailing respondents’ work attitudes, beliefs around individual achievement, risk-taking, trust and cooperation, and redistributive justice. These data, together with qualitative information we have gathered from face-to-face interviews and other “deep culture” analyses, help us provide the reader with texture and a richness we feel are often missing in large-scale values studies. How successful we have been in conveying this detail, however, waits on the judgment of the reader.
While our incursion into the controversial field known as “cultural economics” is far from the first nor is it likely to be the last, it is quite unique. We believe we are the first social scientists to have conducted a multigenerational, multination preference experiment. If readers view our findings as useful in gaining a better understanding of the importance of culture in economic transactions that occur in the labor market, we will have achieved a good deal of our purpose for writing this book. If, in addition, readers recognize that capitalism is a social process that can unfold with economic efficiency or inefficiency as well as with cultural legitimacy or illegitimacy, then we will have achieved a good deal more.
Acknowledgments
There are a great number of individuals who helped make this book possible. In Sweden, we are especially grateful to Annika and Johnny Hansen and Ewa Satermo; in Germany, Christine Tolksdorf and Cecilia Kaltz; in Italy, Roberta Celia and Professor Maurizio Caserta; in Spain, Irene Herranz-Vazquez and Professor Jose Arco-Tirado; in the United States, Sheridan Quarless Kingsberry and Anne E. Camasso; and in India, Rajalaksmi Sadagopan. We would also like to thank the 60 three-generation family members who agreed to share their beliefs, attitudes, preferences, and knowledge with us. The technical assistance of Chet Jagannathan was critical at several junctures in the manuscript preparation process as was the editorial assistance of Jessica Varela and Rachel Towlen-Yepez. Ms. Towlen-Yepez’s work on the book’s cover design was exceptional. Dana Bliss, our editor at Oxford, showed the patience of Job, and this is greatly appreciated.
Notwithstanding the help we received from these individuals and the encouragement from our colleagues at Rutgers, we alone are responsible for any errors that remain and for the conclusions we draw.
Michael J. Camasso Radha Jagannathan
1 Cultural Orientations and Economic Outcomes
Nations like Human Beings are influenced by realities, by practical considerations as to what constitutes self-interest, but they are also influenced by their value codes, by their national characteristics.
David C McClelland, The Roots of Consciousness (1964, p. 90)
There has been a great deal written in the economics literature on the impact of economic institutions, monetary, and labor policy and individual economic capital on outcomes ranging from labor force participation and unemployment to private sector business growth, entrepreneurial activity, and human productivity. With respect to youth and their success in the labor market, the subject of this book, the typical culprits implicated in the problem of unemployment include supply-side factors like skill obsolescence, lower returns to employment than unemployment, skill mismatch (i.e., situations where skill supply and demand diverge due to economic shocks, business cycles, etc.; Layard, 1982; Borjas, 2008; CEDEFOP, 2018a), or insufficient labor demand because of a slow or no-growth economy, excessive taxes or regulations leading to labor market rigidity, and global trade and job exportation (Barlett and Steele, 1996; Crisp and Powell, 2017; Borjas, 2008). Minimum wage policies have also been implicated in employers’ decisions to hire youth (Card and Kruger, 1995; Layard, 1982; Piketty, 2014) with higher wages thought to lower demand.
The economic remedies that have been prescribed for unemployment due to both equilibrium factors (labor supply) and disequilibrium factors (labor demand) depend greatly on the school of economic thought that the prescription writer attended. Classical and neoclassical economists from Adam Smith (1776/2000), the often-called “father of modern economics,” and Leon Walras (1900), the founder of general equilibrium theory, to Nobel laureates like Milton Friedman (1962) and Paul Samuelson (Samuelson and
Caught in the Cultural Preference Net. Michael J. Camasso and Radha Jagannathan, Oxford University Press (2021). © Oxford University Press. DOI: 10.1093/oso/9780190672782.003.0001
Norhaus, 2010) favor market mechanisms like market expansion, efficient labor pricing, competition, and innovation to address the problem. On the other hand, John Maynard Keynes (1936) and his many devotees (see, e.g., Galbraith, 1973; Lucas, 2002) point to the cyclical nature of unemployment in capitalist economies that calls for government interventions in the forms of tariffs, jobs programs, expanded money supply, and other regulatory actions. Finally, Marxists (Marx, 1894/1967; Kautsky, 1959; Sweezy, 1972), who view as immoral any economic system (capitalism) that requires an “industrial reserve army” of unemployed to keep the system running, consider market tinkering as ineffectual and the dissolution of labor markets that alienate workers from the wealth they produce as the only responsible course of action.
No matter the school of thought, economic theories around unemployment are framed around the idea of choices—be they the choices of employers, actual and prospective employees, the government, or other interested parties. As James Duesenberry (1960) once quipped, “Economics is all about choices while sociology is about why people have no choices” (p. 233). Duesenberry may be overstating the case a bit inasmuch as many of the economists we have already listed have discussed limited choices or even no choices (here we would also place some of the work emanating from the Austrian School; e.g., Hayek, 1967; Schumpeter, 1966). Choices, moreover, are rooted in an individual’s preferences, a neoclassical concept that means whenever individuals in a marketplace are presented with a choice they will select one bundle of goods/services over another by attempting to maximize their utility (i.e., their satisfaction; Becker, 1996; McFadden, 1986; Phillips et al., 2002) with the choice. Individuals here are typically portrayed as rational actors whose choices and marginal utilities are the consequences of personal experiences, past consumption behaviors, and psychological motivations. An individual, for example, may choose to remain unemployed even if a surplus of jobs is available if she concludes that her current status as a part-time student (with the training that accompanies this status) offers future earnings that will substantially outweigh wages she could earn in the current labor market.
With this emphasis on the individual, rational actor, neoclassical models of choice have come under scrutiny and criticism for not realistically describing how decisions are made (Kahneman et al., 1999; Coleman, 1990; Bourdieu, 2005). Kahneman et al. (1999), as an example of this critique, assert that preferences, as typically conceived in economics, are
simply expressions of attitudes measured on a dollar scale. Coleman (1990) argues that individual choices are subject not only to an individual’s resource constraints but also to the pressures of social relationships and group cultures. Many neoclassical trained economists respond to these critiques of emotionality and group pressure by advocating for the elaboration and extension of the core preference principle through the inclusion of relevant psychological and sociological factors. There is a caveat, however, summed up succinctly by Gary Becker (1996): “Some anthropologists and sociologists go too far when they claim cultures so dominate behavior there is little room for individual choice” (p. 17). Douglas and Wildavsky (1982) make the same point when they observe that individuals make lifestyle choices all the time, often without group pressure and without succumbing to irrationality.
Culture and Economic Preferences
Arguably, the embedding of rational choices and preferences within the ambience of noneconomic factors began with the observations of the economist, Max Weber (1904/1958). Weber notes:
A glance at the occupational statistics of any country of mixed religious composition brings to light with remarkable frequency a situation which has several times provoked discussion in the Catholic press and in Catholic Congresses in Germany, namely, the fact that business leaders and owners of capital, as well as the higher grades of skilled labour, and even more the higher technically trained personnel of modern enterprises, are overwhelmingly Protestant. (p. 35)
Thus begins Weber’s disquisition into the genesis of modern capitalism in the 17th century where Puritans, an offshoot of Calvinism, developed a rational, morally sanctified business culture (pp. 53–55). Weber finds the shibboleth for this new way of conducting business in the Christian Bible “Seest thou a man diligent in his business? He shall stand before kings” (Proverbs 22:29). Business conducted virtuously (i.e., with honesty, frugality, modesty, and industry) had utility not only because it facilitated credit, contract enforcement, and trade but also because it guided an individual on a path of righteousness, a calling, leading to eternal salvation. Other work on the power
of religious and cultural values and beliefs to impact economic choices, preferences, and behaviors quickly followed (Sombart, 1911; Tawney, 1922).
Before we proceed with our discussion of culture and economic outcomes, this might be a good place to define terms like culture, values, and the like, which appear throughout this book. Many of these terms have been employed interchangeably, resulting in a substantial amount of confusion. First, among the literally hundreds of definitions that appear in the literature, we follow Gary Becker (1996) and consider culture as shared values and preferences handed down from one generation to another through families, peer groups, ethnic and religious groups, etc. (p. 16). Becker sees culture as a set of control mechanisms—plans, recipes, rules, and instructions—that provide an orientation for behaviors, are not easily altered, and have a very small depreciation rate. Note Becker’s acknowledgment of small depreciation rate. The principal components of this definition are often shared in the economics literature (see e.g., Mokyr, 2019; Casson, 2006; Guiso, Sapienza, and Zingales, 2006) and remain true to earlier descriptions that appear primarily in anthropology (Kluckhohn, 1951; Kroeber and Kluckhohn, 1952; Schein, 1984).1
Our definition of values is the same as that provided by the anthropologist Clyde Kluckhohn (1951): “A value is a conception, explicit or implicit, distinctive of an individual or characteristic of a group, of the desirable which influences the selection from available modes, means and ends of action” (p. 395). Kluckhohn goes on to identify the inherent endogeneity of cultural values (i.e., values produce future actions, and these actions, in turn, may cause modifications to a society’s values). Kluckhohn also makes the point that concepts of the desirable can often exhibit a stubborn persistence.
Two additional terms that are too frequently used as substitutes for values are beliefs and attitudes (Kraaykamp, Cemalcilar, and Tosun, 2019; Schwartz, 2012). We do not ascribe to the convertibility of these concepts; instead, we embrace the distinctions proposed by Fishbein and Ajzen (1975) in their classic text on consumer behavior and reasoned action. Whereas values identify desired states of reality, beliefs according to Fishbein and Ajzen represent the information an individual possesses and holds to be true about some
1 Lest the reader express dismay over what could be construed as a reliance on late-arriving economists to the definition of culture, we provide a more typical definition that appears in the culture of economics literature; namely, culture is a choice of equilibrium strategies in a game of multiple equilibria and standard preferences. Here the heterogeneity lies in the expectations over the strategies that will be played in equilibrium (Fernandes, 2008). From this vantage point, it would appear that our adopted definition of culture is a rationality tempered by broader social science.
person, object, event, or situation. Hence, beliefs have a rational (cognitive) basis that, in principle, can be altered when an individual encounters new information that runs contrary to already held convictions. Attitudes, on the other hand, are defined as “a person’s favorable or unfavorable evaluation of a person, object, etc.” (p. 72). Fishbein and Ajzen equate evaluative with affective predispositions, emotional intentions, and behavioral responses. As we have already noted, some prominent social scientists (Kahneman et al., 1999; Bourdieu, 2005) see little downside with the conflation of attitudes and preferences. We will continue to follow the more common convention of treating these concepts as distinctive. Attitudes, throughout this book, will be measured and discussed as individuals’ favorable or unfavorable responses to questions constructed with simple ranking or rating scales while preferences will be measured as the responses of individuals to choice sets (i.e., opportunities for respondents to demonstrate how they would maximize their utilities (satisfaction) under resource constraints). Analysis of the former allows us to examine characteristics of the decision-making individual that might influence current and past employment status. The latter modeling of choice sets permits the economic analysis of the actual decisions made by individuals, which, we believe, brings us closer to an understanding of the youth employment problem that is our focus (for more on this distinction, see Hoffman and Duncan, 1988; Camasso and Jagannathan, 2001). We will have a good deal more to say about the different statistical modeling strategies for attitudes and beliefs, on the one hand, and preferences, on the other, in Chapters 6 and 7 of this volume.
Challenges to Cultural Analyses
For many years after Weber’s seminal work on the economic consequences of cultural values and beliefs, economists, on the whole, appeared to have been content to limit their investigations of individual preferences and other economic matters to economic causes and consequences like income and prices. The admonition offered by Nobel laureate Robert Solow (1970) was emblematic of the hazards awaiting economists who dare employ culture and noneconomic factors in their analyses. Solow warned these researchers they ran the high risk of “ending up in a blaze of amateur sociology” (p. 102). But there are worse risks than being called a sociologist, and that is the risk that discussions of culture could pose to career and livelihood. As David Landes
(2002) declared, “culture in the sense of inner values and attitudes that guide a population, frightens scholars. It has a sulfuric odor of race and inheritance, an air of immutability” (p. 32). When Solow penned his famous quote, social scientists in the United States and Europe were still in the process of trying to digest the findings of the Moynihan Report (Rainwater and Yancey, 1967) and the Coleman Report (Mosteller and Moynihan, 1972). While neither report was authored by an economist, both reports described in vivid detail the educational and economic deprivation that seemed to follow cultural deprivation, measured as racial differences. The personal attacks on Patrick Moynihan and James Coleman were both constant and long-lasting with redemption given only grudgingly and only recently (Hill, 2017; Massey and Sampson, 2009).
It is a 2001 article that appeared in the Quarterly Journal of Economics, co-authored by an economist, that would seem to make Landes’s point brilliantly. Entitled “The Impact of Legalized Abortion on Crime,” Donohue and Levitt (2001) provided evidence indicating that abortion increases made possible by legislation under the Roe v. Wade U.S. Supreme Court decision in 1973 were responsible for the dramatic drop in crime rates in the early through mid-1990s. A careful reading of the article, however, reveals that it is not abortions per se that are the precipitating factor but abortions among Black women that really appear to be responsible. When race entered the analyses, so did a torrent of controversy (Joyce, 2004; Camasso, 2007) that is perhaps best reprised in The Economist article “Oops-nomics: Did Steven Levitt, Author of Freakonomics Get His Most Notorious Paper Wrong?” (“Oops-nomics,” 2005).
As Landes (2002) remarks, the issue goes beyond race and extends to any measures of cultural values and preferences that are perceived by politicians, the general media, and a broad swath of academia as intimating permanency, particularly if this permanency is for the worse. Gannon and Pillai (2016) note that there can be a fine and fuzzy line that separates what social scientists call a stereotype of a society or group’s values, preferences, and behaviors, on one hand, and solid empirical evidence regarding these elements, on the other. Stereotypes are commonly defined in the sociological and psychology literature as group descriptions with low fact content and high levels of caricature, exaggeration, and overgeneralization. What complicates attempts to distinguish unequivocally negative stereotyping from accurate, real-world portrayals of a society or group is the amount of fact contained in the stereotype. Researchers including Jussim et al. (2009) and Simpson and
Yinger (1985), among others, maintain that negative fact content can often be quite high in a culture. We will have a good bit more to say about this contention in Chapter 2 of this volume.
Our Research Questions
Notwithstanding the risks of hectoring and name calling, a sizeable number of economists have bravely entered into a subfield called cultural economics (Fernandez, 2008). Within this subfield, researchers have explored a myriad of topics ranging from fertility and terrorism to artistic output and transportation choices. What interests us in this book are three lines of inquiry that have the potential to help students of both culture and economics gain a better understanding of youth unemployment and labor force attachment.
1. Do some national cultures possess value orientations that are more successful than others in promoting economic opportunity?
2. Does the transmission of these value orientations demonstrate a persistence irrespective of economic conditions, or are they simply the results of these conditions?
3. If a nation’s value orientation does indeed impact economic opportunity, does it do so by influencing an individual’s preferences?
What we know about the answers to these questions is suggestive but far from settled science.
A perusal through any of the rankings of gross domestic product (GDP), per capita income or business activity authored by the World Bank, the International Monetary Fund, the United Nations or the OECD could be viewed as prima facie evidence that some nations possess a set of traits or characteristics contributing to high levels of economic activity that other nations do not possess. A country’s comparative or competitive advantage has been traced to favorable geography and insulation from major wars (Kennedy, 1989), natural disasters, and the lack of natural resources (OECD, 2011; Brunnschweiler and Bulte, 2008) and to too many natural resources (Lindsay, 2000; Sachs and Warner, 2001). None of these explanations, however, account for more than a small portion in the variance extant in these rankings. A much larger literature examines the hypothesis that country rankings are the consequence of differences in cultural values,
especially whether the national culture promulgates individualist or collectivistic values (Franke, Hofstede, and Bond, 2002; Dietrich and Moller, 2016; Triandis, 2002; Hauff and Kirchner, 2015). Often, however, these culture studies devolve into simple (or complex) econometric analysis where GDP or other measure of economic activity is regressed on a variable designating the name of the country and the reader is left to ponder the choices and marginal utilities (preferences) of real individuals—the proximate economic actions—that are responsible for any correlation between country and size of GDP. Without identifying the value orientations responsible for a nation’s economic activity, Question 1 remains, at best, only partially answered.
With respect to the transmission of cultural values across and within societies, several research themes have emerged. One is the apparent resilience of cultural values and preferences, both helpful and harmful to economic development, that have come to define nation-states. Sowell (1996), for example, uses the term “cultural capital” to describe the relative significance that nation-states attach to thrift, intellect, time, knowledge, art, and other features of living that make human existence possible (p. 379). Sowell considers six cultures—German, Italian, Jewish, Chinese, Japanese, and Indian—where values toward work and risk-taking allow individuals to excel in economic endeavors, not only in their native countries but in countries to where they immigrate. Easterly (2006), conversely, documents the persistence of cultures of mistrust and corruption found in many developing countries in Africa and South America. He observes that in countries where you can only trust family members the size of companies is limited by the size of family (p. 51). The resilience of mistrust and corruption in southern Italy is often pointed to as the reason that this region lags behind the rest of the country in economic prosperity (Guiso, Sapienza, and Zingales, 2006; Bigoni et al., 2018). Deaton (2013, 2018) argues that the persistence of corruption in many developing countries dooms foreign aid as an investment tool leading only to failure.
The pessimism surrounding persistence—of both “good” and “bad” values—has been countered to some degree by economists who see cultural factors as temporary barriers to the diffusion of social development and economic growth (The Economist, the Uncultured Science, 2019). Mokyr (2019) traces industrialization and the reality of sustained economic growth to the humanistic approach to scientific inquiry founded in 17th-century England. As linguistic and other communication barriers in Europe were overcome, this belief in Puritan science and technology spread rapidly throughout
the continent. Spolaore and Wacziarg (2009, 2018) likewise, dispel some of the doom and gloom of immutability by providing analyses that find that a society’s ancestral distance from a dominant technological frontier (the United States in this case) acts as only a temporary barrier to the diffusion of development and per capita income. McCloskey’s (2006) work on the creation of business-respecting culture and its effect on social class distances is another instance of eventual cultural mutation. Suffice it to say that at this point the question of intact versus modifiable cultural transmission remains a topic of much interest and of significant disagreement.
Answering Question 2 is essential for legitimizing any role that culturebased employment policies can expect to play in addressing youth unemployment. The sociologist Pierre Bourdieu (1986) provides one answer, and it can be summarized in what has been termed the Bourdieu paradox: while an economic calculation lies behind every action, every action cannot be reduced to an economic calculation (p. 253). Hence, from this perspective preferences and behavioral intentions can be the results of “playing the economic game” with symbolic as well as economic interests coming into play. For Bourdieu, individuals invest time and money in the economic system not only for the prospect of economic gain but also because cultural and symbolic capital are realized. The purchase of a Peugeot by a Frenchman instead of a BMW can be a source of national or regional pride that has utility that can eclipse cost, technology, or efficiency considerations. Quite a different answer to Question 2 is offered by the economist Gary Becker (Becker, 1996; Stigler and Becker, 1977) who maintains that it is technology and costs that constrain preference choices, with culture exerting a stabilizing effect on meta-preferences only (1996, p. 132)—what we have called here value orientations but exerting substantially less influence on transactional preferences or behavioral intentions. These day-in and day-out choices are viewed by Becker (1996) as the result of price, incomes, wages, and economic opportunities (p. 35). Bourdieu and Becker in essence extend the Weber–Marx quarrel to the origins of personal tastes.
To answer Question 2 with some degree of confidence, it is necessary to solve the endogeneity problem that has confronted cultural economics from its inception. In a nutshell, the problem that must be solved is one of causal direction: Are cultural values responsible for economic outcomes like labor force attachment or economic prosperity, or is the reverse also true? In attempts to solve this problem, economists are on the lookout for a suitable instrumental variable, a stand-in for culture that is related to culture and is not
directly related to economic outcomes but is indirectly correlated with any economic outcomes through culture.2 A few examples of the creative use of instruments will help the reader better understand the concept. Guiso, Sapienza, and Zingales (2006) examine whether values of trust impact the probability of becoming an entrepreneur. Rather than simply use a measure of trust gleaned directly from individuals’ responses to an attitude survey, the authors use a measure of trust that is correlated with type and level of religiosity. The logic here is that trust, emanating from religious values, occurs prior to entrepreneurial decisions and outcomes. In another instance, these authors use an individual’s current residence, identified as a city in Italy that was governed as an independent city-state 500 years in the past or was ruled by a foreign king, on investment and lending practices (Guiso, Sapienza, and Zingales, 2008). Spolaore and Wacziarg (2017) use genetic markers (blood group systems) as instruments for the cultural values responsible for economic activity and national prosperity. In their own words, “the underlying idea was that populations at greater distance (genetically) from each other had more time to diverge in terms of intergenerationally transmitted traits, such as cultural norms, values, beliefs, habits, language and religion” (p. 750). This ancestral distance from a technological frontier (e.g., 17thcentury England vs. 20th-century United States) acts as a barrier to the spread of innovations and economic development.
One of the most common practices for addressing the endogeneity issue is to employ an intergenerational, cultural transmission model. The assumption here is that while economic conditions like prices, wages, costs, technology, and product supply/demand change overtime (especially in a capitalist society), cultural values and preferences change more slowly (Fernandez, 2008; Bisin and Verdier, 2011; Twenge et al., 2010). Bisin and Verdier (2011) provide a theoretical justification for this assumption, which they refer to as “imperfect empathy.” They note that there is a fundamental friction in parental altruism, which sustains cultural transmission by biasing parents toward their own cultural traits. While parents generally want the best for their children (altruism), they evaluate their choices using their own and not their children’s
2 A good instrumental variable has three qualities. First, it has relevance (i.e., instrument Z affects X the independent variable). In Spoloare and Wacziarg (2017) genetic blood groups are transmitted (Z) while transmitting culture (X). Second, it affects Y the dependent variable only through X. This is called the exclusion condition. One would not expect blood group, per se, to impact per capita income; if it has an effect, the effect works through culture. Third, it has no common cause with Y. This is the independence criterion. See Angrist and Pischke (2015) for an excellent discussion of instrumental variables.
preferences (p. 341). In a similar fashion, Guiso, Sapienza, and Zingales (2008) describe a dynamic where parents do not weigh future and current benefits exactly the same way children do because parents internalize more of the costs of their children’s mistakes when they are still at home. These economists show that the transmission tends to be biased toward excessively conservative priors. Societies with prior value orientations that stress cooperation, trust, and optimism tend to operate economically in a state of hightrust, high-trade equilibrium; those that stress pessimism languish in more sluggish economies, stuck in a low-trust, low-trade equilibrium.
The approach we use in this book to address the culture–economic activity endogeneity problem can be termed the overlapping generations/transmission of culture model. Controlling for country differences in Sweden, Germany, Italy, Spain, the United States, and India, we examine whether the preferences, attitudes, and beliefs of millennials, their parents, and their grandparents exhibit intergenerational stability or change. Our analyses also allow us to assess if country differences in preferences, attitudes, and beliefs persist notwithstanding any generational differences. How successful we have been in establishing an independent impact of culture can be judged by our readers in the analyses we perform in Chapters 6 and 7. We are reminded here of Tawney’s (1922) critique of Max Weber and his groundbreaking examination of the Spirit of Capitalism. Tawney queries:
Is it not a little artificial to suggest as Weber appears to imply, that capital enterprise had to wait till religious changes had provided a capitalist spirit? Would it not be equally plausible, and equally one sided, to argue that the religious changes were themselves merely the result of economic movements? (p. 262)
We think Tawney seriously undervalues the cultural instruments Weber provided to his readers, and it is in that spirit we offer ours.
Our answers to Question 3 appear in the empirical analyses we conduct in Chapters 6 and 7. Chapter 6 tests eight attitudes and beliefs that have been conceptually and/or empirically linked to the intention to engage in economic activity. These beliefs and attitudes operationalize culture at the day-to-day transaction level, and their stability or variance across nations and generations can give us added insights into the culture–economy relationship. Chapter 7 tests the national and generational stability or variance in preferences for employment directly. We do this by conducting a stated preference experiment that allows us to observe choice behaviors directly.
Preferences in our modeling are viewed as the critical linchpin in value orientations that link culture to market behavior (McFadden, 1975).
Our Conceptual Framework and Plan of this Book
In this book we examine how the values, preferences, and attitudes of grandparents (born mid-1940s–1964) and parents (born 1965–1982) compared with the labor force attachment, achievement, and risk-taking preferences and work values of their grandchildren and children (born 1983–2000). These three generations have been identified by demographers as members of the traditionalist baby boom generation, Generation X, and millennials (Kalleberg and Marsden, 2013; Settersten, Furstenberg, and Rumbaut, 2008). We conduct a series of discrete choice experiments (DCEs) with members of all three generations. In this application, the DCEs are a quantitative method for measuring the utilities that influence individual employment choices, specifically choice of a job type. We augment these experiments with survey data that provide us with information on an individual’s attitudes and beliefs around eight important components of economic activity: trust, personal achievement, cooperation, risk-taking, redistributive justice, development of economic capital through education and training, and the values of work centrality and labor force attachment. These beliefs and attitudes have been linked to the intention to seek or avoid employment. By intention here we mean, as does Fishbein and Ajzen (1975), the probability of acting on belief, attitude, or preference. We illustrate the architecture of our modeling in Figure 1.1.
Figure 1.1 reflects several substantial intellectual debts. We acknowledge the influence of Kluckhohn (1951), Kroeber and Kluckhohn (1952), and Schein (1984) on the distinction we make on deeper value orientations, which are difficult to measure, and more visible beliefs and attitudes that can signal intentions and behavior patterns. Our inclusion of eight beliefs and attitudes linked to economic activity is the result of a distillation of a broad body of work in cultural economics that we shall elaborate upon in Chapter 2. The modeling of observable preferences and behavioral intentions as the culture stimuli responsible for updated value orientations owes a great deal to the work of Guiso, Sapienza, and Zingales (2004, 2006, 2008), Bisin and Verdier (2011), Tabellini (2008a, 2008b), and Fernandez (2008).
While the focus of nearly all our analyses is on how preferences and the constellation of the eight indicators of cultural intentions are manifest in the
Conceptual model used to organize the book’s arguments and analyses.
Figure 1.1
