A father, a mother, and their children – this arrangement constitutes a “nuclear family”. Perhaps a misnomer today, the term was first used in 1924 to describe what many think of as a stable, traditional household. In many ways, the perceived stability of a nuclear family comes from how neatly it facilitates the continuation of society. The father earns the income, the mother raises the children, and the children grow up and do it all over again. And that’s the way it is, because what other way could there be?
Albeit unevenly, the world has changed a lot since 1924. It isn’t just men who may receive higher education, earn the most in a household, or run a company. Family dynamics continue to shift, with many countries seeing the nuclear family in sharp decline. Sociologists have noted the ‘rising tide’ increasing equality in areas of gender, race, and sexuality.
It’s fair to say that our economic evolution since 1924 has been equally impressive. An explosion of transportation and communication technology has created a globally connected system of economies inconceivable to someone alive a century ago. With such rapid developments in both the economic and cultural spheres of society, to what extent are they interlinked? And is it cultural development that influences economic development, or is it the other way around?
For the longest time, economists have been hesitant to investigate the link between culture and economics. Culture can be so abstract and personal, and analysing it through economics’ scientific framework might produce notions that are, at worst, xenophobic. However, new metrics and techniques have made economists more willing and able to investigate this relationship. The resulting spate of new research has seen cultural economics become a distinct and emerging subfield of behavioural economics.
Predominantly, the existing literature focuses on the ways culture affects economic outcomes. One of the first papers in this area analysed the relationship between cultural trust levels and financial activity across Italy. The results showed a positive correlation between community trust and business and consumer credit, firm shareholder numbers, and cheque usage. Researcher Paola Sapienza describes trust as a “highly cultural variable, often transmitted from parents to kids”. Sapienza suggests that trust levels have a strong impact on one’s willingness to engage in financial and economic interactions with others.
Building off this foundation, economists Thorsten Hens and Mei Wang compared countries’ psychological uncertainty metrics against decision making in their domestic financial sector. They found that cultural differences had unique effects on rational decision-making, and could cause differences in risk-taking, stock selection and investment negotiations. These types of studies could play a part in answering the age-old question: why do some countries’ economies blossom while others stagnate?
In other cases, it seems that the effects of economic development catalyse cultural changes.
One such change is the emergence of a new family form driven by forces of migration. Sociologists have observed the emergence of an “astronaut family”, a household where a primary worker migrates and supports the family in the home country. This arrangement is particularly prevalent amongst Chinese families, who have migrated to a vast number of countries. While astronaut families may see children benefit financially, the lack of contact with one parent is likely to have negative emotional impacts.
Globalisation’s effect on culture remains a fierce debate. Although the magnitude of influence is unquestionable, there is a great division in opinions on whether it has brought a net benefit. Nations have benefitted from the spread and exchange of ideas as well as the consolidation of their own cultural identity. However, globalisation has had many negative effects as well, such as increased corporate hegemony, the proliferation of extremist ideals, and the destruction of indigenous cultures. Political theorist Fredric Jameson suggests that globalisation will end in either a pluralist and harmonious global existence, or a corporatized monoculture where identity and expression have been stripped from cultural groups.
Of course, these ideas represent just a small fraction of the existing cultural economics literature. Perhaps it isn’t possible to say whether culture or economics truly exerts a dominant force of influence over the other. To quote an OECD report on new economic approaches: “People are not individual utility maximisers of orthodox economic myth: they have multi-dimensional preferences and ethics formed in social and cultural settings.” It seems that unlike decades past, the future of economic analysis will no longer turn a blind eye to culture as a variable.
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