Culture and cross-country differences in institutions
In Chapter 3 we described three ways by which culture has entered economics during recent decades: culture as a source of preferences; culture as a source of constraints; and culture as a deviation from the model. The last approach ascribes the unexplained part to culture, lacks any theoretical underpinning, and is therefore not considered explicitly in this book. The other two approaches differ with respect to the assumption as to whether culture can change quickly or not and whether the influence of cultural factors dominates (constrain) the rest of the societies’ structure. Both approaches assume that values influence (and are influenced by) a society’s institutions and the results (economic growth, etc.) obtained. Many empirical studies make use of large datasets on cultural dimensions and values (Hofstede, Schwartz, and World Value Survey) for studying relations between culture and economic phenomena.