Economics: A look beyond markets

Many welfare projects fail because targeted beneficiaries refuse to participate. In these situations, Nathan Nunn, Frederic E. Abbe Professor of Economics at Harvard University, argues that cultural understanding combined with economic analysis may help. Nunn, who is also receiving a Simon Fraser University (SFU) Outstanding Alumni Award, will be speaking at the 2017 BMO Public Lecture event hosted by SFU on September 14. The talk is aimed towards a general audience interested in topics such as gender roles and economic development.

“We invited Dr. Nunn not only because of his connection to SFU as an undergraduate alum but also – and perhaps more importantly – for his research contributions over the past ten years,” says David Jacks, Professor of Economics at SFU.

Jacks describes Nunn’s research as instrumental in resurrecting the notion that “history matters” in economics. He also credits Nunn with engaging in a research agenda that stresses how “culture matters” in the field.

“These related strands of research are pushing economics in the direction of being distinctly more interdisciplinary, but in a way that meaningfully engages with the contributions of other fields,” says Jacks.

The long shadow of history

“I came to study culture through my interest in long-run economic development,” says Nunn. “My research has traced the different paths of development of different societies.” Events that happen to different societies at the beginning of their development paths result in measurable differences on a variety of social issues. These issues range from the adaptation of democratic values and institutions, to the evolution of gender norms, to the level of mistrust in society.

A common theme that runs through Nunn’s research is the interconnectivity of history, culture, economics and political institutions. Culture, to economists, is a set of shared beliefs and “rules-of-thumb” that a community adopts to cope with decision making in complex and uncertain situations. Historical events can influence how these rules are formed. As beliefs and social norms are passed from parents to children, history can have long-lasting effects by persisting through culture.

As an example, Nunn points towards research on the legacy of French colonial medical campaigns in sub-Saharan Africa. The researchers found that areas with higher medical refusal rates correspond to areas with higher exposure to past medical campaigns. During colonial times, painful treatments with harmful side effects were administered by force to entire villages.

“These areas have developed a culture of mistrust towards Western medicine,” says Nunn. “This is not surprising and is completely understandable. These refusal rates and general suspicion are often attributed to irrationality, but understanding their origins can help move policy forward.”

The hunt for understanding

If culture and norms have long-term consequences on economic development, is there such a thing as good or bad culture? Should some social norms be encouraged above others? Nunn objects to this line of thinking.

Nathan Nunn, Frederic E. Abbe Professor of Economics at Harvard University. | Photo courtesy of Nathan Nunn

“I don’t think there is ‘good’ culture or ‘bad’ culture,” says Nunn. “How does one define good or bad? It depends on what one is trying to accomplish and all cultural traits have costs and benefits.” His goal is to observe past and present cultural traits, to understand why they exist and the effects they have.

Most people view economics as a dry science of supply and demand. Yet, this is an inaccurate assessment of the field. Nunn points out that Adam Smith, considered the grandfather of economics, wrote about the psychology of individuals, morality, culture, and decision making in The Theory of Moral Sentiments before writing his famous book The Wealth of Nations.

“Outside of the profession, economics is viewed as being about interest rates, supply and demand, etc,” says Nunn. “While much research is about markets, the core of economics is understanding human behaviour and the nature of societies. Understanding culture is a part of this.”

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