Institutions and Culture

How and why does distant political and economic history shape
the functioning of current institutions? This paper argues that individual
values and convictions about the scope of application of norms
of good conduct provide the "missing link". Evidence from a variety
of sources points to two main findings. First, individual values consistent
with generalized (as opposed to limited) morality are widespread
in societies that were ruled by non-despotic political institutions in
the distant past. Second, well functioning institutions are often observed
in countries or regions where individual values are consistent
with generalized morality, and under different identifying assumptions
this suggests a causal effect from values to institutional outcomes. The
paper ends with a discussion of the implications for future research.