Dyadic value distance: Determinants and consequences

Abstract

This paper establishes a measure of bilateral differences in values using 857 questions from the World Values Survey. We explore the determinants of value distance, linking it to geography as well as the historical relatedness of populations across 90 countries. Furthermore, we explore the explanatory power of value distance for the diffusion of technological development.

Economic preferences and trade outcomes

“…In regard to the broader trade literature, we contribute to the shift in discussion from conventional drivers like size and transportation costs to "missing trade" (Trefler 1995) and "dark" trade costs (Head and Mayer 2013) by proposing a novel influence in the form of national preference leanings and a simple mechanism by which its influence would occur. Closest to our analysis are Frank (2018) and Jaeggi et al (2018) who analyse cultural attitudes as factors for overall economic development. These are future orientation and other measures from the GLOBE survey in the former and a dyadic values distance measure computed using the World Values Survey in the latter case.…”

“…In the same vein, information regarding cultural, religious and genetic distance from Wacziarg (2016, 2018) is used to account for the more general effects of alien-or likeness. The Dyadic Values Distance measure created by Jaeggi et al (2018) and drawn from the World Values Survey is included for contrast and comparison; as are the Hofstede dimensions (see Hofstede et al 2010).…”

“…This result is in line with Melitz and Toubal (2014), who likewise find insignificant language effects when using PPML estimators 15 and whose language data is used in this analysis. Specifications ( 2) and ( 3) incorporate a bilateral distance in preferences measure similar to Jaeggi et al (2018) or Spolaore and Wacziarg (2018) regarding values and genetics. This variable is defined as the unweighted average of the l single preference distances:…”

“…While the GPS is unique in its combination of decision-relevant preferences and experimental validation, some of its contents have been analysed before. The World Values Survey (WVS) (Jaeggi et al 2018) and the Hofstede Dimensions (Hofstede et al 2010) report measures for some of the GPS preferences, which are used for robustness checks in this analysis. Additionally, Wacziarg's genetic and religious distances Wacziarg 2016, 2018) are used to ascertain their relationship with preferences, controlling for potential links between these traits and preferences.…”

“…57 countries of the GPS are also included in the WVS, 47 of them contain all of the items, providing a sufficiently large set for comparison on aggregate volumes. Bilateral distances for the WVS variables are drawn from Jaeggi et al (2018).…”