Greater polarisation in values and attitudes harms economic activity across Europe, according to research by Sjoerd Beugelsdijk, Mariko Klasing and Petros Milionis, to be presented at the Royal Economic Society”s annual conference at the University of Bristol in April 2017.
The authors analyse data from 250 regions of the European Union on GDP per capita, and link that to levels of polarisation in those regions in five dimensions: trust; work norms; gender norms; attitudes towards the market economy; and views about democracy.
The polarisation data is taken from answers to the European Values Survey, which asked respondents questions such as ”Should women work or is their main role to be at home and take care of the children?” In all five dimensions, higher polarisation in a region is linked with lower GDP per capita, lower provision of basic public goods and weaker governance.
”We find that the impact of value diversity on GDP per capita is clearly negative, consistent across the five dimensions”, the authors say. ”Our findings suggest that if a society can break away from polarisation, find common ground and stress the values we share and the ties that bind us together, it will be more productive. Not just because it makes Europe a more pleasant place to live, but also because it is better for our wallets.”
A striking development in the recent years has been the increased polarisation within societies in terms of values and attitudes. On many important social and economic issues, people are recently embracing more and more extreme positions. While there is some anecdotal evidence regarding the role of polarisation for different economic outcomes, our study is the first to document that this polarisation is generally harmful for economic activity.
To establish this result we look at data from 250 regions of the European Union. Based on this data, we investigate the impact that polarisation in terms of different kinds of values and attitudes has on each region”s level of GDP per capita, which we treat as a global measure of economic development.
To measure polarisation in terms of values and attitudes at the regional level, we use responses to survey questions provided by the European Value Survey. These questions relate to how individuals view the world and what values they hold dear.
Key questions have to do with: Should the state do more or should private initiative be promoted? Can people be trusted, or should we be careful in trusting strangers? Should women work or is their main role to be at home and take care of the children? Are democracies indecisive or are democracies good to govern the country?
The responses to these and many more questions from the survey are then aggregated to measure polarisation in terms of five different dimensions: trust, work norms, gender norms, attitudes towards the market economy and views about democracy.
We find that the impact of value diversity on GDP per capita is clearly negative, consistent across the five dimensions and also extends to other dimensions of values. We also show that value polarisation is persistent. Emigrants originating from more polarised regions tend to hold more polarised views.
Our analysis also indicates that the harmful effects of polarisation on economic development are closely related to the functioning of the regional government. Specifically, our findings indicate that in more polarised regions, the provision of basic public goods is lower and quality of governance is weaker.
This suggests that polarisation erodes the glue that binds society together, which depends on the values that individuals share. Polarisation in terms of values results in a fragmented society consisting of people taking entrenched positions and feeling that their fellow citizens do not share their values.
Recent events suggest that his patterns may become even more prevalent in the years to come. The recently polarised political debates in the UK and the United States, as well as those in the Netherlands, France and Germany related to parliamentary elections indicate a growing polarisation in basic values.
In this context, the results of this study suggest that a society that can break away from polarisation, find common ground and stress the values we share and the ties that bind us together is more productive. Not just because it makes Europe a more pleasant place to live, but also because it is better for our wallet.
”Value Diversity and Regional Economic Development” by Sjoerd Beugelsdijkm, Mariko J. Klasing and Petros Milionis from the University of Groningen, The Netherlands.