Post Materialism and Comparative Economic Development: Do Institutions Act as Transmission Channel?

Abstract

Although a growing number of countries are experiencing structural societal changes characterised by an increased prominence of post materialistic societal goals and personal values, there is limited empirical evidence on the economic effects of post materialism. In this paper, we address this gap in the literature by estimating the effect of post materialism on the level of economic development for a heterogeneous set of countries. Furthermore, in line with the notion that institutions may act as transmission channel of economic effects of social values, we estimate whether institutions transmit indirect effects from post materialism. Our findings show that post materialism and institutions both generate sizeable effects on economic development. Institutions create consistent positive effects. The effect of post materialism consists of a negative direct effect and a larger positive indirect effect transmitted via institutions related to personal freedom, a solid regulatory framework and low corruption. These findings reflect the importance of accounting for the effects of social values such as post materialism and institutions as well as their interrelationship to identify more fully their impact on economic development.