Understanding the Individualism-Collectivism Cleavage and Its Effects: Lessons from Cultural Psychology

Abstract

In this paper, we survey our recent work showing theoretically and empirically a link between individualist culture on one hand and long run growth and innovation. The individualism-collectivism cultural dimension is the only one that has a robust effect on measures of long run growth. We survey the cross-cultural psychology culture that finds that the individualism-collectivism cleavage is also the most important one in that literature. We discuss some of the implications of the lessons from the psychology literature on the economic and institutional effects of the individualism-collectivism cleavage.