Individualism during crises

To be clear, this paper is quite one-sided, since it does not recognize that the more individualistic cultures are also the leaders in science.  Nonetheless there is an important lesson in this recent work from Bo Bian, Jingjing Li, Ting Xu, and Natasha Foutz:

Individualism has long been linked to economic growth. Using the COVID-19 pandemic, we show that such a culture can hamper the economy’s response to crises, a period with heightened coordination frictions. Exploiting U.S. counties’ frontier experience during the 1790-1890 period as exogenous variation in individualism, we show that more individualist counties engage less in social distancing and charitable transfers, two important collective actions during the pandemic. An interquartile increase in individualism offsets 41% of the effect of state lockdowns on social distancing and dampens COVID-related donations by 48%. We confirm the social distancing results at the individual level using de-identified cellular location data and exploiting migrants for identification. The effects of individualism are stronger in counties where social distancing has higher externality (i.e., higher population density and more seniors). Our results replicate at the country level and are not driven by political beliefs or social capital. Overall, this paper suggests that individualism can amplify economic downturns by exacerbating collective action problems precisely when such actions are most valuable.

Via the excellent Kevin Lewis.  Under my perspective, of course, it is the individualistic cultures that are supplying the international public goods.


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