Greater polarisation impedes collective action and is associated with lower levels of GDP per capita, write Sjoerd Beugelsdijk, Mariko J. Klasing and Petros Milioni

Beugelsdijk, Sjoerd

Klasing, Mariko J.

Milionis, Petros

LSE Research Online

5/30/2017Growing social value polarisation harms economicdevelopmentblogs.lse.ac.uk /businessreview/2017/05/30/growing-social-value-polarisation-harms-economic-development/A striking development in recent years has been the increased polarisation in terms of values and attitudes thatmany societies around the world are witnessing. This is noticeable both in public opinion surveys as well as inrecent election outcomes. People are shifting to more extreme positions on many important social and economicissues and are also voting for politicians and political parties that embrace these positions.While this development has been widely noticed and it is frequently discussed by politicians, journalists andacademics, its implications for economic activity are largely unknown. This has motivated us to study the economiceffects of diversity and polarisation in values and attitudes within societies. In particular, our analysis is the first todemonstrate that greater diversity and polarisation in terms of values is generally harmful for economicdevelopment.To establish this result we look at data from 250 regions of the European Union. Based on these data, we investigatehow the degree of diversity in terms of values held by individuals affects each region’s level of GDP per capita,which we treat as a broad measure of economic development.To measure polarisation in terms of values and attitudes at the regional level, we use responses to survey questionsprovided by the European Value Survey. These questions relate to how individuals view the world and what valuesthey hold dear. Key questions have to do with: Should the state intervene more or should private initiative bepromoted? Can people be trusted, or should one be careful when dealing with strangers? Should women work or istheir main role to stay at home and take care of children? Are democracies a good form of governance or are theyindecisive? The responses to these and many more questions from the survey are then aggregated to measurepolarisation in terms of five broad dimensions: trust, work norms, gender norms, attitudes towards the marketeconomy and views about democracy.The map displayed in Figure 1 visualises the average degree of value diversity across these five dimensions in each1/4region with darker shades indicating higher diversity. While value diversity is generally higher in Eastern andSouthern European countries, the map highlights that there is also a lot of variation in value diversity across regionswithin countries.Figure 1. Values diversity across regionsThe implications of value polarisation for economic development can be seen in the scatter plot provided in Figure 2.The figure indicates how the degree of value diversity in each region compares with the regional level of GDP percapita conditional on other important regional characteristics. The relationship between the two is clearly negative,as can be seen from the red line in the graph. Greater polarisation in terms of values is associated with lower levelsof GDP per capita.Figure 2. Values polarisation and regional GDP per capita2/4The above pattern is consistent across all five groups of values. We also find that the effect of value diversity onregional economic development dominates the effect of other dimensions of societal diversity such ethnic orreligious diversity. We furthermore show that value diversity is persistent. Emigrants originating from more polarisedregions tend to hold more polarised views.Beyond documenting this pattern, our study also indicates that the harmful effects of polarisation on regional GDPper capita are related to the functioning of the government in each region. Looking at the quality of governance andthe provision of public goods, such as education, health care or transportation infrastructure, we find that both areweaker in regions where values are more polarised. This suggests that value polarisation erodes the glue that bindssociety together. As the values that individual hold become more diverse, societies become more fragmented,finding common ground gets harder and collective action becomes more difficult.Recent events suggest that his pattern may become even more prevalent in the years to come. Current politicaldevelopments in the United States and several European countries indicate a increasing polarisation in underlyingvalues. In light of this trajectory, the results of this study suggest that it is essential for societies to find ways to breakaway from polarisation and strengthen the ties that bind people together; not just because it makes Europe a morepleasant place to live, but also because it is better for our wallet.♣♣♣Notes:This post is based on the authors’ paper  Value Diversity and Regional Economic Development, forthcomingat the Scandinavian Journal of Economics, and presented at the Royal Economic Society’s annualconference at the University of Bristol, April 2017.3/4The post gives the views of its author, not the position of LSE Business Review or the London School ofEconomics.Featured image credit: Student protest in London 2012, by Joshua Hayes, under a CC-BY-SA-2.0 licenceBefore commenting, please read our Comment Policy.Sjoerd Beugelsdijk  is Professor of International Business at the University of Groningen andReviewing Editor of the Journal of International Business Studies. His research interests are in thefields of national cultural diversity, international business, and globalization. He has publishedmore than 50 refereed articles and edited special issues in leading journals, such as the Journal ofInternational Business Studies and the Journal of Economic Geography. He has also written anumber of books, including the monograph Culture in Economics and the textbook InternationalEconomics and Business. Email: s.beugelsdijk@rug.nlMariko J. Klasing is an Assistant Professor in the Department of Global Economics andManagement at the University of Groningen. Her main fields of interest are in the areas ofeconomic development and cultural economics. Email: m.j.klasing@rug.nl Petros Milionis is an Assistant Professor in the Department of Economics, Econometrics andFinance at the University of Groningen. His main research interests are in the areas of economicgrowth, international economics and regional economics. Email: p.milionis@rug.nl  Copyright © 2015 London School of Economics4/4

Growing social value polarisation harms economic development

Abstract

Similar works

Full text

Available Versions

LSE Research Online