1 / 8

Culture Rules: The Foundations of the Rule of Law and Other Norms of Governance

Culture Rules: The Foundations of the Rule of Law and Other Norms of Governance. By Licht, Goldschmidt and Schwartz Discussant: Mariassunta Giannetti Stockholm School of Economics, CEPR and ECGI. Culture and Governance.

zubin
Download Presentation

Culture Rules: The Foundations of the Rule of Law and Other Norms of Governance

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Culture Rules: The Foundations of the Rule of Law and Other Norms of Governance By Licht, Goldschmidt and Schwartz Discussant: Mariassunta Giannetti Stockholm School of Economics, CEPR and ECGI

  2. Culture and Governance • Which are the determinants of rule of law, corruption, democratic accountability? • Economists’ answers: laws, and ultimately wealth distribution, and other economic factors. • Legal origin • This paper: culture • Values, knowledge and other factors that influence behavior transmitted from a generation to the next

  3. Related literature • Other papers have related culture to investor protection • Litcht, 2001 • Litch et al., 2001 • Stulz and Williamson, 2003 • It remains to be explained how culture is related to laws, corruption, rule of laws • i.e., which is the mechanism? • I am not commenting on the specific measures of culture…

  4. Does culture matters? • Evidence from more specific contexts • Guiso, Sapienza and Zingales • Trust affects propensity to use financial instruments such as checks and buy stocks in Italy • Trust in others and common cultural values affect economic exchange • Religiosity affects attitude towards business • Landier • Attitude towards failure affects propensity to undertake risky projects • Giannetti and Simonov • Social norms (again, culture) affect the propensity to become entrepreneurs

  5. The mechanism of the big picture • Why culture affects rule of law, corruption, democratic accountability? • Direct • Indirect • The diffusion of stock ownership depends on culture such as the propensity to trust others • Some countries protect property and in particular shareholders’ rights better because stockownership is more diffused. • Mechanism important for policy implications

  6. The mechanism of the big picture (continued) • Culture changes in response to economic incentives • Eg, Reformation • Why would some countries maintain a culture that brings to suboptimal economic outcomes? • It is only a matter of preferences? • Need models and equilibrium • Culture may have been affected by institutions in the past and these may also affect current governance • Gennaioli and Rainer (2005) • Provision of public goods in colonial and post-colonial Africa depends on pre-colonial institutions • This might depend on the effects of pre-colonial institutions on, say, wealth distribution

  7. The mechanism of the big picture (continued) • The relation between laws and value is complex • Laws may shape values • Funk (2004) • Non-enforced laws affect individual behavior • In certain Swiss Cantons, the legal abolishment of the voting duty significantly decreased voter turnout • Laws and values may be substitutes • Gneezy and Rustichini (2000) • A fine is a prize • After the introduction of a fine, parents are more likely to pick up kids at the kindergarten late

  8. Conclusions • I liked the paper • It made me think • Micro empirical testing and modeling to dig out mechanisms

More Related