Post Materialism and Comparative Economic Development: Do Institutions Act as Transmission Channel?

Abstract

Although a growing number of countries are experiencing structural societal changes characterised by an increased prominence of post materialistic societal goals and personal values, there is limited empirical evidence on the economic effects of post materialism. In this paper, we address this gap in the literature by estimating the effect of post materialism on the level of economic development for a heterogeneous set of countries. Furthermore, in line with the notion that institutions may act as transmission channel of economic effects of social values, we estimate whether institutions transmit indirect effects from post materialism. Our findings show that post materialism and institutions both generate sizeable effects on economic development. Institutions create consistent positive effects. The effect of post materialism consists of a negative direct effect and a larger positive indirect effect transmitted via institutions related to personal freedom, a solid regulatory framework and low corruption. These findings reflect the importance of accounting for the effects of social values such as post materialism and institutions as well as their interrelationship to identify more fully their impact on economic development.

The post-materialist economic freedom puzzle

“…Kafka and Kostis (2021) finds a negative effect among OECD countries for the period 1981-2021, although they do not control for economic freedom, but for regulatory quality. Jordaan and Dima (2020) and Jordaan (2023) separate direct and indirect effects of post-materialism on economic growth and find the direct effect, which is measured after controlling for institutional quality, to be negative.…”

“…More generally, a higher level of post-materialism is associated with institutions, which then leads to higher economic growth. Jordaan and Dima (2020) finds a causality that runs from post-materialism to GDP per capita through institutional quality measured by the World Bank Governance Indicators (Kaufmann et al, 2010), while for Jordaan (2023) such an effect works through economic freedom. In both papers this indirect effect is positive: even after controlling for different possible determinants, a less materialist (a more post-materialist) country has institutions that are not only of higher quality but economically freer.…”

Social Values, Economic Freedom and Economic Growth. A Comparative Analysis

“…The idea that the relation between social values and economic growth is mediated by institutions and economic freedom can be found in works of Johnson and Lenartowicz (1998), Williamson and Mathers (2011), Jordaan and Dima (2020) and Jora et al (2020). In addition to standard economic variables such as physical capital, human capital and innovation, non-standard variables such as geographic latitude, institutions, culture and social capital are considered important factors in explaining economic success (Roşca, 2020).…”

“…They also found that economic freedom is more important than culture in explaining economic growth. Jordaan and Dima (2020) analyzed the effect of post-materialism on economic development. They concluded that institutions are the channels of transmission for the indirect effects of social values.…”

Why is the West unique in linking religiosity to market friendliness?

“…2 2 Jordaan and Dima (2019), however, conclude that the negative effect is only the direct effect of post‐materialism. The indirect one works through institutions and increases growth.…”