Measuring Individualism

To me the idea that individualism as a cultural value has a two-way causal relationship with economic prosperity is so intuitive that it’s almost banal. So I wasn’t surprised to learn that a couple clever economists have a study (PDF) purporting to demonstrate that this is the case:


To me the most interesting thing about the study isn’t the analysis, but one of the premises of the analysis—namely that we can rigorously measure “individualism” and thus see what it correlated with. How do they do this?

A key question for our empirical analysis is how to measure individualism. A well-known measure of individualism (and other cultural dimensions) at the country level was developed by Hofstede (2001) who used surveys of IBM employees in about 30 countries. To avoid cultural biases in the way questions are framed, the translation of the survey into local languages was done by a team of English and local language speakers. With new waves of surveys and replication studies, Hofstede’s measure of individualism has been expanded to almost 80 countries. In a nutshell, the individualism score measures the extent to which it is believed that individuals are supposed to take care of themselves as opposed to being strongly integrated and loyal to a cohesive group. Individuals in countries with a high level of the index value personal freedom and status, while individuals in countries with a low level of the index value harmony and conformity. Hofstede’s index as well as the measures of individualism from other studies use a broad array of survey questions to establish cultural values. Factor analysis is used to summarize data and construct indices. In Hofstede’s analysis, the index of individualism is the first factor in work goal questions about the value of personal time, freedom, interesting and fulfilling work, etc. This component loads positively on valuing individual freedom, opportunity, achievement, advancement, recognition and negatively on valuing harmony, cooperation, relations with superiors. Although Hofstede’s data were initially collected mostly with the purpose of understanding differences in IBM’s corporate culture, the main advantage of Hofstede’s measure of individualism is that it has been validated in a number of studies. For example, across various studies and measures of individualism (see Hofstede (2001) for a review) the United Kingdom, the USA and Netherlands are consistently among the most individualist countries, while Pakistan, Nigeria, and Peru are among the most collectivist.

So there you have it. At any rate, what I think is most interesting about this is this. It’s well-known that there are basically two groups of very prosperous countries. On the one hand, the relatively low tax Anglophone bloc and on the other hand the relatively high tax Dutch/Nordic bloc. Then in popular accounts you have a disagreement as to whether the Dutch/Nordic model works well because of cultural aspects of those countries are different from Anglophone culture—for example, they’re inherently driven by solidaristic values so incentives don’t matter as much—or because of cultural attributes we share in common.

I’ve been drawn to the “common cultural attributes” thesis just based on the observation that Nordic pop culture (Max Martin, Stieg Larsson, Ida Maria, Robyn) penetrates the Anglosphere very easily and has done so for a long time (Abba, Aha, Ibsen). It still strikes me that the most plausible mechanism here has to do with corruption and good government rather than individualism per se. I imagine that everyone looks out for his or her own interests, but the question becomes what does that balance with. If you balance it with fairly abstract principles of correct conduct, you get good government and enlightened self-interest. If you balance it with loyalty to extended family groups or long chains of personal connections, then you get corruption.

But that’s just ideas I made up.