Individual Responsibility and Economic Development: Evidence from Rainfall Data

Abstract

This paper estimates the effect of individual responsibility on economic development using an instrument derived from rainfall data. I argue that a taste for collective responsibility was adaptive in preindustrial societies that were exposed to high levels of agricultural risk, and that these attitude continue to influence contemporary social norms. The link between agricultural risk and collective responsibility is formalized in a model of informal risk sharing arrangements that incorporates optimal parental socialization decisions. Empirically, I find a robust negative correlation between rainfall variation, a measure of exogenous agricultural risk, and measures of individual responsibility. Finally, using rainfall variation as an instrument, I find that individual responsibility has a large positive effect on economic development. The empirical relationships between rainfall variation, individual responsibility and economic development are robust to the use of alternative measures of individualism and rainfall variation and to the inclusion of controls for contemporary and historical agricultural outcomes, soil and climate quality, early institutional quality, and dimensions of climate and geography associated with institutional development.

Keywords: Culture, Development, Individualism, Collectivism, Values, Informal Institutions, Risk Sharing, Kinship Networks, Socialization, Rainfall

JEL Classification: O1, Z13, Q54