4.1 Post Materialism and Economic Development
We start the analysis by estimating the direct effect of post materialism on GDP/Capita. Table
4 presents the findings from estimating several specifications of regression model (1). The first three columns contain the findings from OLS estimations that include the indicators of post materialism and the other control variables whilst omitting the institutional country characteristics. All three indicators of the country level of post materialism carry positive and significant coefficients, suggesting that post materialism fosters economic development.
9 However, as discussed in the previous section, it is difficult to interpret the estimated coefficients of the post materialism indicators as it is very likely that they incorporate a positive effect of the level of economic development on the degree of post materialism. The estimated effects of the other control variables are in line with expectations. The estimated negative effects of fractionalisation and the population shares of Catholics and Muslims are in line with the literature. The estimated positive effect of trade openness confirms the positive effect of trade on economic development. The estimated coefficient of the Monarchy variable carries the correct sign but is statistically insignificant.
Table 4Post materialism and economic development GDP/Cap 2014 dependent variable
PM | 3.32*** (0.71) | | | 5.42*** (1.82) | | | | | |
PM-M | | 1.36*** (0.30) | | | 2.16*** (0.72) | | | | |
Inglehart index | | | 0.95*** (0.31) | | | 2.17*** (0.81) | 2.18*** (0.77) | 2.26*** (0.80) | 2.22*** (0.78) |
Fractionalisation | − 0.53** (0.25) | − 0.58** (0.25) | − 0.63** (0.26) | − 0.38 (0.27) | − 0.50** (0.25) | − 0.49* (0.25) | − 0.36 (0.28) | − 0.25 (0.31) | − 0.26 (0.31) |
Monarchy | 0.10 (0.18) | 0.05 (0.19) | 0.16 (0.20) | − 0.10 (0.25) | − 0.17 (0.27) | − 0.17 (0.30) | − 0.10 (0.28) | − 0.15 (0.28) | − 0.11 (0.28) |
ShareCatholic | − 0.43*** (0.15) | − 0.46*** (0.15) | − 0.39** (0.16) | − 0.51*** (0.17) | − 0.56*** (0.17) | − 0.49*** (0.18) | − 0.35** (0.17) | − 0.12 (0.21) | − 0.18 (0.21) |
ShareMuslim | − 0.77*** (0.25) | − 0.67*** (0.26) | − 0.71*** (0.27) | − 0.72*** (0.26) | − 0.58** (0.27) | − 0.55* (0.31) | − 0.52* (0.29) | − 0.66** (0.29) | − 0.60** (0.28) |
Tradeopenness | 1.54*** (0.30) | 1.51*** (0.30) | 1.56*** (0.33) | 1.44*** (0.32) | 1.41*** (0.32) | 1.40*** (0.36) | 0.85*** (0.39) | 0.94** (0.42) | 0.76** (0.35) |
Europe | | | | | | | 0.42*** (0.14) | | 0.29** (0.14) |
Latin America | | | | | | | | − 0.56** (0.23) | − 0.33 (0.27) |
F | 22.73 | 22.45 | 18.11 | 17.89 | 17.95 | 14.28 | 14.34 | 13.29 | 12.54 |
Adj. R-squared | 0.64 | 0.63 | 0.58 | 0.62 | 0.63 | 0.53 | 0.58 | 0.57 | 0.59 |
F first stage | | | | 12.66 | 13.78 | 12.92 | 12.91 | 13.26 | 13.02 |
Adj. R-squared first stage | | | | 0.16 | 0.17 | 0.16 | 0.15 | 0.17 | 0.17 |
Anderson LM statistic | | | | 11.76 (0.00) | 12.62 (0.00) | 11.96 (0.00) | 12.10 (0.00) | 12.38 (0.00) | 12.35 (0.00) |
n | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 | 75 |
The second set of columns contains the results when we instrument the post materialism variables with the pronoun drop rule variable. Judging from the first stage F, R-squared and Anderson under-identification statistics, the instrumentation of the post materialism variables functions satisfactorily. Looking at the estimated effect of post materialism with the IV estimator, the findings show coefficients that are larger than those obtained with the OLS estimations, although F-tests indicate that the differences are not statistically significant.
10 Whereas post materialism may dampen the level of economic development due to the promotion of societal goals that are less geared towards production and income maximisation, it may also promote economic development by fostering individualism and economic freedom. The estimated positive effect of the instrumented post materialism variables suggests that on balance the positive economic effect of post materialism is larger than its negative effect. Further on in the analysis we will assess whether the inclusion of the institutional variables to the model changes this finding.
11
The final three columns contain the results from adding multi-country regional dummies to the regression model. As the model is parsimoniously specified, there is the issue that important variables may have been omitted from the model. To assess whether this impacts upon the estimated effect of post-materialism, we re-estimate the model adding dummy variables for Europe and Latin America, continents that are strongly represented in the sample. As the findings show, countries located in Europe have a structurally higher level of income per capita, whereas countries in Latin America have a structurally lower level of income per capita. Looking at the other control variables, the estimated effects of the variables capturing ethnic fractionalisation and the population share of Catholics turn insignificant, indicating that their effect is largely absorbed by the two continent dummies. Importantly, the estimated effect of the Inglehart index is unaffected by the inclusion of the two continent variables.
Before we continue with the analysis by estimating the system of equations that incorporates the effects of post materialism, institutions and their interrelationship, we conduct a set of additional estimations to assess the robustness of the estimated relation between post materialism and GDP/Capita as presented in Table
4. In particular, we estimate the model using GDP/Cap measured prior to the occurrence of the financial crisis, with an extended indicator of post materialism, on a restricted sample that omits former communist countries and with alternative instruments for the post materialism variables.
First, there has been a drop in the level of post materialism following the financial crisis of 2007–2008. Differences in the degree to which countries experienced and dealt with the effects of the financial crisis may have impacted upon their economic performance and may also have created changes in the relation between economic development and post materialism. To assess whether this is the case, we replace GDP/Cap measured for 2014 with GDP/Cap measured for 2006. Columns 1–3 in Table
5 presents the findings from using this alternative dependent variable. Compared to the findings with GDP/Cap 2014, the estimated effect of the three post materialism indicators is larger for the period prior to the financial crisis. However, F tests indicate that the differences between the estimated coefficients that are obtained from using GDP/Cap 2006 are not significantly different from the results with GDP/Cap 2014.
12 This indicates that the estimated relation between post materialism and the level of economic development has not been affected by the financial crisis.
Table 5Direct economic effect of post materialism: robustness analysis
PM | 5.25** (2.10) | | | | | 4.80*** (1.48) | | | | | | |
PM-M | | 2.17** (0.90) | | | | | 1.91*** (0.58) | | | | | |
Inglehart index | | | 2.18** (1.03) | | | | | 1.93*** (0.66) | 4.17*** (1.27) | 3.32*** (0.87) | 2.31** (1.00) | 2.80*** (0.82) |
Welzel and Inglehart ( 2005) | | | | 0.79** (0.33) | 0.93*** (0.36) | | | | | | | |
Fractionalisation | − 0.58* (0.31) | − 0.66** (0.31) | − 0.64* (0.35) | − 0.50 (0.34) | − 0.35 (0.38) | − 0.45 (0.28) | − 0.56** (0.28) | − 0.56* (0.31) | − 0.42 (0.41) | − 0.33 (0.35) | − 0.53** (0.25) | − 0.46 (0.31) |
Monarchy | 0.11 (0.27) | 0.01 (0.31) | 0.01 (0.35) | − 0.08 (0.32) | 0.03 (0.36) | 0.04 (0.21) | − 0.01 (0.22) | 0.009 (0.25) | − 0.39 (0.40) | − 0.31 (0.30) | − 0.47 (0.40) | − 0.60 (0.40) |
ShareCatholic | − 0.47** (0.18) | − 0.54** (0.21) | − 0.46** (0.22) | − 0.51** (0.25) | − 0.58** (0.31) | − 0.48*** (0.18) | − 0.49*** (0.18) | − 0.38** (0.20) | − 0.76*** (0.28) | − 0.65*** (0.22) | − 0.68*** (0.22) | − 0.72*** (0.22) |
ShareMuslim | − 0.54* (0.33) | − 0.55* (0.34) | − 0.50 (0.38) | − 0.50* (0.28) | − 0.64** (0.31) | − 0.96*** (0.31) | − 0.81** (0.32) | − 0.72** (0.37) | − 0.88** (0.45) | − 0.76** (0.38) | − 0.55* (0.31) | − 0.46 (0.32) |
Tradeopenness | 1.96*** (0.36) | 1.79*** (0.40) | 1.80*** (0.46) | 1.44*** (0.53) | 1.63*** (0.59) | 1.29*** (0.35) | 1.33*** (0.35) | 1.30*** (0.39) | 0.78 (0.59) | 0.82* (0.47) | 1.82*** (0.36) | 1.79*** (0.38) |
F | 22.75 | 21.04 | 16.43 | 10.64 | 12.07 | 16.20 | 16.58 | 13.19 | 9.92 | 11.21 | 14.37 | 13.44 |
Adj. R-square | 0.70 | 0.68 | 0.58 | 0.58 | 0.62 | 0.68 | 0.69 | 0.61 | 0.30 | 0.37 | 0.61 | 0.55 |
F first stage | 9.25 | 9.86 | 9.03 | 10.90 | 10.90 | 18.26 | 22.87 | 23.05 | 11.22 | 8.56 | 8.61 | 8.81 |
Adj. R-square first stage | 0.13 | 0.14 | 0.13 | 0.21 | 0.21 | 0.27 | 0.32 | 0.32 | 0.15 | 0.50 | 0.13 | 0.52 |
Anderson LM statistic | 8.96 (0.00) | 9.47 (0.00) | 8.77 (0.00) | 10.10 (0.00) | 10.10 (0.00) | 15.20 (0.00) | 17.82 (0.00) | 17.92 (0.00) | 10.57 (0.00) | 15.40 (0.00) | 8.61 (0.00) | 14.30 (0.00) |
Sargan statistic | | | | | | | | | | 2.21 (0.14) | | 0.12 (0.72) |
n | 75 | 75 | 75 | 75 | 75 | 56 | 56 | 56 | 69 | 68 | 65 | 64 |
Second, we estimate the model using a different indicator of post materialism. This alternative indicator is based on Welzel and Inglehart (
2005), who construct an indicator of post materialism that is geared towards capturing the degree of liberty aspirations incorporated into post materialistic values. Next to using the responses to the questions on what a country’s first and second priority should be that underlie the calculation of the standard Inglehart index, they add another priority question regarding citizens’ capacity to have more say in their jobs and their communities. Adding this information, they calculate an indicator of post materialistic liberty aspirations ranging from 0 to 5, with 5 representing citizens prioritising all the post materialistic values.
13 The drawback of this variable is that the additional question on country priorities is only available in the World Values Survey and not in the European Values Study, resulting in a substantial drop in the number of observations.
Columns 4 and 5 present the results from using the alternative post materialism indicator. The estimated effect of the alternative post materialism indicator is significant and positive, both for the models that use GDP/Cap 2014 and GDP/Cap 2006 as dependent variable. This is fully in line with the findings that we obtain with the Inglehart index. Although the Welzel and Inglehart (
2005) indicator of post materialism is arguably more informative as it incorporates an additional post materialistic value, we prefer to use the more standard Inglehart index, as it is available for more countries and produces a similar effect.
Third, we estimate the model on a restricted sample. Setting aside the decrease in post materialism following the financial crisis, the overall impression is that there has been a steady increase in the level of post materialism in the world economy during the last decades. However, several countries in our sample consist of Eastern European and former communist countries. For these countries, the relationship between post materialism and economic development may be structurally different from the other countries in the sample, given the likelihood that concepts of materialism and post materialism were given different meanings when these countries were under communist regimes. Furthermore, the drastic and structural changes that these countries experienced since the fall of communism in the late 1980s may have impacted upon processes fostering materialistic and/or post materialistic values, which we measure in our analysis for the mid-1990s.
To assess whether the presence of former communist countries in the sample is affecting the estimated effect of post materialism, we estimate the regression model on a restricted sample that omits these former communist countries. As the results in Table
5 show, the findings with GDP/Cap 2014 as dependent variable with the restricted sample show coefficients of the post materialism variables that are smaller than for the full sample as presented in Table
4. However, the differences between the estimated effects of the post materialism indicators of the two sets of estimations are not significant, suggesting that any structural differences between former communist countries and the group of other countries in the sample do not influence the estimated relation between post materialism and economic development.
14
Finally, we explore the relationship between post materialism and the level of economic development using different instruments. One alternative instrument is based on the link between climatic characteristics or climatic volatility and social values. A recent example of a study that investigates this link is Giuliano and Nunn (
2017), who find that historical data capturing the stability of average temperatures is significantly associated with a preference for traditions and the persistence of cultural traits. Another example is provided by Davis (
2016), who relates the historical variation of monthly rainfall to the relative importance of individualism versus collectivism, arguing that a higher level of rainfall variation increases agricultural risk and is therefore likely to foster collective responsibility (see also Nugent and Sanchez
1999). Davis’s findings show a significant negative association between rainfall variation and the importance of individual responsibility, indicating that weather volatility is related to this particular type of social value.
We use the rainfall variation variable as specified by Davis (
2016) to instrument for the country level of post materialism. Post materialists value autonomy and independence and as such can be thought to rate individual responsibility. This suggests that societies that experience a lower variation in rainfall will be more characterised by individual responsibility, in line with post materialistic values related to economic independence and autonomy. To calculate the rainfall-based instrument, we use the CRU CY4.01 dataset from the University of East Anglia Climatic Research Unit (Harris and Jones
2017). This dataset contains monthly precipitation levels for most of the countries in our sample. Following Davis (
2016), we calculate for each country the natural log of the average coefficient of variation of yearly intertemporal rainfall and then compute averages for the period 1901–2010.
Columns 9 and 10 report the findings from instrumenting the Inglehart index with the rainfall variation instrumental variable or with both the rainfall variation variable and the pronoun drop rule variable, using GDP/Cap 2014 as dependent variable. The estimated effect of the Inglehart index persists to be positive and is significantly larger than the effect that we obtain when using the pronoun drop rule variable as instrument. The first stage statistics indicate that the instrument based on rainfall variation functions satisfactorily. The p value of the Sargan statistic reported in column 10 from the estimation where we use both instruments shows that the overidentifying restrictions cannot be rejected, indicating that the instruments are appropriate. A drawback of the use of the rainfall variation instrumental variable is that the R-square of the second stage of the estimation is substantially lower compared to the estimation that is based on the pronoun drop rule instrumental variable. In any case, the use of the alternative instrument does confirm the significant and positive association between post materialism and GDP per capita.
The other alternative instrument that we use is linked to research that uses insights from research on population genetics to identify drivers of economic development. Spolaore and Wacziarg (
2009) use data from Cavalli-Sforza et al. (
1994) to calculate an indicator of international genetic distances. Cavalli-Sforza et al. (
1994) use information from a set of genes to calculate genetic differences between 42 world population groups. Combining this data with information on the distribution of these population groups over the countries in the world economy, Spolaore and Wacziarg (
2009) construct a dataset capturing genetic distances between countries.
15 They interpret their indicator of genetic distance as a ‘summary statistic capturing divergence in the whole set of implicit beliefs, customs, habits, biases, conventions, etc. that are transmitted across generations—biologically and/or culturally’ (Spolaore and Wacziarg
2009, p. 471).
16 In their estimations, they find that genetic distances are significantly associated with international income differences. They explain their findings by arguing that countries that are genetically close to the world technological frontier (the United States) find it easier to adopt new knowledge and technologies, as genetic proximity suggests that countries contain deep underlying social and cultural traits that facilitate the adoption of such new technologies.
Based on the interpretation by Spolaore and Wacziarg (
2009) that the genetic distance between countries captures intrinsic cultural differences, we can use genetic distances as an instrument for the country level of post materialism.
17 To do so, we take the country with the highest level of post-materialism in the dataset—Australia—as representing the world frontier of post materialistic values. We then use the dataset from Spolaore and Wacziarg (
2009) to calculate the genetic distance between Australia and the other countries in the sample and use this genetic distance between the countries and Australia as instrumental variable for post materialism. This approach is based on the assumption that when the genetic structure of the Australian population fosters a high level of post materialism, countries that are genetically close to Australia should also have a relative high level of post materialism.
The findings from using the genetic distance variable or both the genetic distance variable and the pronoun drop rule variable as instruments are presented in columns 11 and 12. We obtain findings similar to the other estimations, with the Inglehart index carrying a significant and positive coefficient. The magnitude of the estimated effect is very similar to the effect obtained for the full sample of countries with the pronoun drop rule as instrumental variable as reported in Table
4. The Sargan statistic reported in column 12 from the IV estimation using both instruments indicates that the over identifying restrictions cannot be rejected, suggesting that the instruments as a set are exogenous.
4.2 Post Materialism, Institutions and Economic Development
The findings in the previous section provide evidence that there is a significant and positive association between post materialism and GDP per capita, an association that appears robust to sample composition, time frame, choice of post materialism indicator and choice of instrumental variable. To assess whether the estimated effect of post materialism is affected by the inclusion of variables that capture key institutional characteristics and by the interrelationship between post materialism and institutions, we proceed by estimating the system of Eqs.
2a–
2c for each of the individual institutional variables. The findings for the key variables of interest are presented in Table
6. We report the estimated coefficients from the first, second and third stage of the estimations together with the goodness of fit for each of the stages. As the results show, in the first stage the pronoun-drop rule is significantly associated with the Inglehart index, which in turn is significantly associated in the second stage with the various institutional indicators.
Table 6Post materialism, institutions and economic development: 3SLS estimations
Inglehart index | | 4.87*** (0.56) | − 1.84** (0.73) | Inglehart index | | 5.67*** (0.63) | − 0.78 (0.61) |
Voice and Accountability | | | 1.27*** (0.16) | Rule of law | | | 0.89*** (0.11) |
Pronoun drop | − 0.24 *** (0.04) | | | Pronoun drop | − 0.24*** (0.04) | | |
Goodness of fit Chi2 | 30.47 (0.00) | 76.09 (0.00) | 128.58 (0.00) | Goodness of fit Chi2 | 30.45 (0.00) | 80.74 (0.00) | 160.12 (0.00) |
Inglehart index | | 4.62*** (0.52) | − 1.93*** (0.73) | Inglehart index | | 7.08*** (0.67) | − 2.38*** (0.77) |
Regulatory quality | | | 1.36*** (0.16) | Control of Corruption | | | 0.96*** (0.12) |
Pronoun drop | − 0.23*** (0.04) | | | Pronoun drop | − 0.23*** (0.04) | | |
Goodness of fit Chi2 | 30.18 (0.00) | 72.23 (0.00) | 146.24 (0.00) | Goodness of fit Chi2 | 29.75 (0.00) | 109.74 (0.00) | 134.04 (0.00) |
The top left of Table
6 contains the findings from estimating the system of equations that controls for the effect of voice and accountability. The results contain three important features. First, in strong contrast to the findings in Tables
4 and
5, the third stage findings indicate that the effect of post materialism has turned negative. This is in line with the argument that post materialism dampens the level of economic development as it attaches less importance to production and income maximisation. This change in estimated effect is also in line with the small set of studies that were discussed in the literature review that find that the inclusion of controls of institutional country characteristics can impact upon the estimated economic effect of social values. Second, the estimated effect of the variable of voice and accountability is significant and positive, in line with the common finding in the literature that institutions foster economic development. Third, given that we instrument voice and accountability in the system of equations with the post materialism variable, the estimated positive effect of the institutional variable also confirms that voice and accountability acts as a transmission channel of an indirect effect of post materialism on economic development. The explanation for this indirect effect is that citizens with post materialistic values put pressure on governments and society to improve institutions in order to advance their values and priorities.
Looking at the results of the estimations with the other institutional variables, the findings with regulatory quality and control of corruption are similar to the results that we obtain with voice and accountability. In both cases, the direct economic effect of post materialism is negative, whereas the effect of the institutional variables is positive. Looking at the size of the estimated coefficients suggests that the direct negative effect of post materialism is the strongest when using control of corruption as institutional variable. The institutions of regulatory quality and voice and accountability create the largest positive effects. The estimated effect of post materialism turns insignificant when controlling for rule of law as institutional force, suggesting that in this estimation the entire effect of post materialism consists of an indirect effect that runs via this institution.
To assess the robustness of these findings, we estimate the system of equations for all the differently specified models that underlie the findings in Table
5. The findings from this additional set of estimations are presented in table A.3 in the Online Appendix. Overall, the findings are similar to those presented in Table
6. In all estimations, the significant direct positive effect of the institutional variables is confirmed. Similarly, the estimated effect of the post materialism variable is always negative, although the effect turns insignificant when using the Welzel and Inglehart (
2005) post materialism indicator or with rainfall variation as alternative instrumental variable. The use of genetic distance as alternative instrument for the post materialism variable produces estimated positive effects of the institutional variables and negative effects from post materialism that are larger than those that we obtain with the pronoun drop rule instrumental variable.
The limitation of the findings is that although they confirm that institutions act as transmission channel of an indirect effect of post materialism on economic development, we cannot assess the relative size of this indirect effect. The findings in Tables
4 and
5 present the direct effect of post materialism without accounting for its effect on institutions. The findings in Table
6 present the direct effect of post materialism after taking out its indirect effect that runs via institutions. To obtain an indicator of the relative importance of the full and indirect effects of post materialism, we use the approach of residual generated regressors (Pagan
1984; Gomanee et al.
2005; Jordaan et al.
2016). To do so, we adjust the system of equations in the following manner. We regress the institutional variables on the Inglehart index:
$$Institutions_{i} = \delta_{0} + \delta_{1} PostMaterialism_{i} + \gamma_{i} ;$$
(3a)
the residuals of this estimation contain the part of the variation of institutions that is unexplained by post materialism. The full equation that we estimated for Table
6 is:
$$\left( {\frac{GDP}{Cap}} \right)_{i} = \beta_{0} + \beta_{1} PostMaterialism_{i} + \beta_{2 } Institutions_{i} + \beta_{3} X_{i} + \varepsilon_{i}$$
(3b)
Substituting (
3a) into (
3b) gives:
$$\left( {\frac{GDP}{Cap}} \right)_{i} = \left( {\beta_{0} + \beta_{2} \delta_{0} } \right) + \left( {\beta_{1} + \beta_{2} \delta_{1} } \right) PostMaterialism_{i} + \beta_{2} \gamma_{i} + \beta_{3} X_{i} + \varepsilon_{i} ;$$
(3c)
where the Inglehart index is instrumented with the pronoun drop rule variable. The estimation of (
3b) and (
3c) gives similar results for the control variables, except for the estimated effect of the post materialism variable. In Eq.
3c,
\(\left( {\beta_{1} + \beta_{2} \delta_{1} } \right)\) captures the full effect of post materialism on economic development, consisting of a direct effect
\(\beta_{1}\) and an indirect effect
\(\beta_{2} \delta_{1}\).
18
The findings from estimating Eq. (
3c) are presented in Table
7. We report the findings from models with GDP/Cap 2014 or GDP/Cap 2006 as dependent variable. Looking first at the results for the full period, the estimated full (direct + indirect) effect of post materialism is significant and positive. This means that the indirect effect of post materialism that runs via institutions is positive and larger than the direct negative economic effect of post materialism as reported in Table
6. Therefore, the overall effect of post materialism is positive, suggesting that the positive economic effect that is caused by post materialists putting pressure on institutions to improve is larger than the dampening economic effect related to the promotion of non-materialistic societal goals. Looking at the total positive effect of post materialism obtained with the different institutional variables, the findings suggest that this effect is the largest when accounting for the relationship between post materialism and the institution of voice and accountability. The differences of the estimated effect of post materialism between the models with the different institutional variables are modest, however, which is likely to be caused by the high degree of correlation between the institutional indicators from the WGIP. As for the findings with GDP/Cap 2006 as dependent variable, overall the estimated total effect of post materialism is higher, but the differences with the results for the full period are modest.
19Table 7Direct and total effect of post materialism on economic development
Dependent variable 3rd stage | | | | |
Voice and accountability | − 1.84** (0.73) | 2.89*** (0.34) | − 1.43** (0.75) | 3.33*** (0.37) |
Regulatory quality | − 1.93*** (0.73) | 2.74*** (0.32) | − 1.75** (0.79) | 3.28*** (0.35) |
Rule of law | − 0.78 (0.61) | 2.69*** (0.31) | − 0.25 (0.65) | 3.16*** (0.33) |
Control of corruption | − 2.38*** (0.77) | 2.64*** (0.32) | − 1.97** (0.84) | 3.10*** (0.35) |
Finally, we use the estimated coefficients from Tables
6 and
7 to obtain an indicator of the relative importance of the direct and total effects from post materialism and the direct effects from institutions. We calculate the effects on the dependent variable from a one standard deviation increase of post materialism and institutions and relate these changes to a one standard deviation of the dependent variable. The results are presented in Table
8. The estimated direct negative effect of post materialism causes a decrease in GDP/Cap of between − 0.55 and − 0.71 standard deviation when the estimation controls for the effect of voice and accountability, regulatory quality or control of corruption. As reported earlier, when controlling for rule of law, the direct effect of post materialism turns insignificant. The total positive effect of post materialism lies between 0.79 and 0.87 standard deviation increase of GDP/Cap, with the largest positive effect occurring when the estimation controls for the effect of voice and accountability. The positive effect of institutions is larger, with a one standard deviation increase creating an increase in GDP/Capita of around 1.5 standard deviations. The increase is smaller in the case of rule of law, with an increase in the dependent variable of 1.3 standard deviations. Overall, these findings clearly indicate that both post materialism and institutions create economically meaningful effects on the level of economic development.
Table 8Magnitude of effect on GDP/Cap 2014 of change in post materialism and institutions