Does Culture Affect Economic Growth?

The long debate over whether cultural values explain why some societies grew richer, from Max Weber's Protestant ethic to modern evidence.

Economists have long debated whether culture, meaning shared values, beliefs and norms, helps explain differences in prosperity between societies.

Weber’s Protestant ethic

In 1905, the German sociologist Max Weber published The Protestant Ethic and the Spirit of Capitalism. He argued that certain Protestant beliefs encouraged hard work, thrift and investment, helping capitalism develop in northern Europe.

Testing Weber

Later research questioned Weber’s explanation. Economists Sascha Becker and Ludger Woessmann studied 19th-century Prussia and found that Protestant areas were indeed more prosperous, but largely because Protestants had higher literacy. Martin Luther had encouraged people to read the Bible themselves, which spread schooling. The effect ran through education, or human capital, rather than a distinct work ethic.

Modern evidence on culture

Research has found that cultural traits can persist over generations and influence economic behaviour:

Trust and cooperation, as discussed in the previous lesson.
Attitudes toward women’s work: research by Alberto Alesina, Paola Giuliano and Nathan Nunn found that societies whose ancestors used the plough, which required upper-body strength, developed norms favouring men’s work outside the home, and these norms persist today.
Saving behaviour, individualism and attitudes to risk.

Caution

Economists warn against cultural stereotypes. Cultures change, sometimes quickly, and the same culture can be associated with poverty in one era and prosperity in another. East Asian societies, once said by some to have cultures unsuited to growth, later grew rapidly. Institutions, policies and circumstances interact with culture.

The plough and women's work

In regions where farming historically used the heavy plough, men did most field work, and norms developed that women should work at home. Research found that even today, descendants of these societies, including immigrants living elsewhere, tend to have lower female labour force participation. A farming technology from centuries ago still shapes behaviour.

Thinking culture is fixed and determines destiny

Cultures evolve with economic change, education and institutions. Culture can influence outcomes, but it does not doom or guarantee any society's prosperity.

Key takeaways

Max Weber argued in 1905 that the Protestant ethic encouraged capitalism.
Becker and Woessmann found Protestant prosperity worked largely through higher literacy.
Cultural traits like trust and gender norms can persist for generations.
Culture interacts with institutions and changes over time.