Behavioral Explanations of Spatial Disparities in Productivity: The Role of Cultural and Psychological Profiling

Abstract

This article argues that theories of economic development and productivity should move beyond the generally known factors and mechanisms of such development. It is theoretically proposed and empirically illustrated that differences in human behavior are significant deep-rooted causes of spatial economic and productivity disparities. The article examines the relationship between behavioral constructs and productivity using data for local areas across England. Measures of personality psychology and community culture (including both living culture and cultural heritage) are hypothesized to be related to activities impacting upon productivity performance at the local level. The analysis indicates that underlying human behavioral factors play a role in determining rates of productivity and levels of economic development in localities and regions. Culture and psychological traits, as manifested in the form of the psychocultural behavior of localities and regions, appear to shape their long-term development trajectories. Localities that have relatively atomized behavioral environments with high levels of individual commitment tend to enjoy productivity benefits. Similarly, places with high rates of cultural diversity and extravert individuals have relatively high rates of productivity. It is concluded that from a policy perspective, governments looking to level up local and regional economies should pay greater attention to understanding behavioral influences on productivity, especially related to strategies focused on behavioral nudges, institutional changes, and education systems.