Abstract
The literature regarding cultural background change points out that changes in cultural background can only be slow moving. However, under high uncertainty levels, cultural background may change in the short or medium term as well. In this paper, the effects of uncertainty on cultural behaviors are investigated. Cultural background is captured through the Schwartz’s cultural values, based on the waves provided by the European Social Survey from 2002 up to 2018, performing relative Principal Component Analyses. An Uncertainty Index is constructed based on the volatility of the stock market for all Eurozone countries, from the euro’s adoption in January 2001 up to December 2018. Using an unbalanced panel dataset comprised of 18 Eurozone countries for the time period from 2002 up to 2018, a fixed-effects assessment method, different fixed terms between the examined economies, dummies per wave of the nine total data waves of the European Social Survey and country-specific clustered robust estimates of the standard errors, the main conclusions of the empirical analysis are the following: (a) Uncertainty significantly affects the cultural background of societies and leads to its change; (b) The effects of uncertainty on culture start two years after an uncertainty shock has occurred; (c) The effects of uncertainty on specific cultural values reveals significant effects on all Schwartz’s cultural values. However, the effect is the highest for the dipole “conservatism and autonomy” and the smallest for the dipole “mastery vs. harmony”. (d) When uncertainty is high, this leads to higher levels of hierarchy (authority, humbleness), self-direction (independent thought and action), stimulation (excitement, novelty and challenge in life), affective autonomy (pursuit of actively positive activities: pleasure, exciting life) and mastery (ambition and hard work, daring, independence, drive for success) which means their life’s harmony is disrupted, at least two years later. Thus, countries exhibiting systematically high levels of uncertainty are about to develop a cultural background that is going to hinder economic development, and vice versa.
Highlights
The change of cultural values over time is an issue that concerns, among other things, economic science, as this change is responsible for the reform of the economic, political and social life of societies. Boyd and Richerson (2005) argue that cultural change should be considered an evolutionary process based on Darwin’s theory, in which some cultural values become more common and others are lost.The general observation about the change in cultural background is that it remains relatively stable over time “under normal conditions”
All regressors are positive and statistically significant, at 1% level of statistical significance, except from the second principal component of the cultural value of hierarchy vs. egalitarianism. This means that when uncertainty is higher this leads to higher levels of hierarchy, self-direction and stimulation, affective autonomy and mastery, at least two years later
The analysis provided by the present paper concludes that there is significant effect of uncertainty on cultural values in the Eurozone countries during the period from 2002 up to 2018
Summary
The change of cultural values over time is an issue that concerns, among other things, economic science, as this change is responsible for the reform of the economic, political and social life of societies. Boyd and Richerson (2005) argue that cultural change should be considered an evolutionary process based on Darwin’s theory, in which some cultural values become more common and others are lost. The general observation about the change in cultural background is that it remains relatively stable over time “under normal conditions”. This conclusion emerges if one considers that the cultural dimensions that shape the cultural background remain relatively constant over time (De Jong, 2009; Petrakis and Kostis, 2014). Individuals who have adopted specific cultural characteristics tend to retain them in the process of gathering information They do not show signs of change in existing stereotypes. The fact that the cultural dimensions and the cultural background remain stable “under normal conditions” leaves much room for reflection and control of these conditions.
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