Despite the huge evidence documenting the relevance of inclusive political institutions and a culture of cooperation, we still lack a framework that identifies their origins and interaction. In a model in which an elite and a citizenry try to cooperate in consumption risk-sharing and investment, we show that a rise in the investment value encourages the elite to introduce more inclusive political institutions to convince the citizenry that a sufficient part of the returns on joint investments will be shared. In addition, accumulation of culture rises with the severity of consumption risk if this is not too large and thus cheating is not too appealing. Finally, the citizenry may overaccumulate culture to credibly commit to cooperate in investment when its value falls and so inclusive political institutions are at risk. These predictions are consistent with the evolution of activity-specific geographic factors, monasticism, and political institutions in a panel of 90 European regions spanning the 1000-1600 period. Evidence from several identification strategies suggests that the relationships we uncover are causal.

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A culture of cooperation, which is the implicit reward from cooperating in any prisoner's dilemma and investment types of activity, and inclusive political institutions, which enable the citizenry to better select public-spirited representatives and check their decisions, are key for economic development. To foster research on the determinants and impact of these institutions, we illustrate a novel data set employed in [1] and [4] and gathering a measure of the activity of the Cistercians and the Franciscans, which is a proxy for the citizens' culture, and a constraints on the elite's decision-making power score, which is a proxy for the inclusiveness of political institutions, for a panel of 90 European historical regions spanning the 1000–1600 period.

Seventh-grade students at robert college (grades 7-12) in Istanbul, Turkey, have been involved in making scale drawings. They were instructed to make a rough drawing of their apartments and to measure them in any way they wanted. Some students measured in meters, some in centimeters, and some in feet and inches. Other students paced off their apartments.