The Correlation between Human Capital and Morality and Its Effect on Economic Performance : Theory and Evidence

The Correlation between Human Capital and Morality and Its Effect on Economic Performance : Theory and Evidence

This paper incorporates morality -- defined as lower utility from consuming goods obtained through appropriative rather than productive activities -- into a simple static general equilibrium model in which agents choose whether to be producers or a...

Full description

Bibliographic Details
Main Authors: Balan, David J., Knack, Stephen
Format: Policy Research Working Paper
Language:English
Published: 2012
Subjects:
ACHIEVEMENT
CAUSATION
COMPETITIVENESS
CONSTANT RETURNS TO SCALE
CORRELATIONS
DEVELOPMENT POLICY
ECONOMETRIC MODELS
ECONOMETRICS
ECONOMIC PERFORMANCE
EDUCATION LEVEL
ENDOGENOUS VARIABLES
ENTREPRENEURSHIP
EQUATIONS
ETHICAL BEHAVIOR
ETHICS
EXPORTS
FORMAL EDUCATION
FUTURE RESEARCH
GDP
GDP PER CAPITA
GENERAL EQUILIBRIUM MODEL
HONESTY
HUMAN CAPITAL
HUMAN DEVELOPMENT
HYPOTHESES
INCOME
INCOME LEVELS
INDEPENDENT VARIABLES
INFERENCE
INTUITION
ISLAM
LET
LINEAR MODELS
MISSING DATA
MODELING
MORALITY
NUMERICAL ANALYSIS
ORDINAL SCALES
OUTLIERS
PAPERS
PER CAPITA INCOME
PERSONALITY
POLITICAL ECONOMY
PREDICTION
PREDICTIONS
PROBABILITY
PRODUCTION FUNCTIONS
PSYCHOLOGY
PUBLIC SERVICES
PURCHASING POWER
REALITY
REASONING
RELIGION
RELIGIONS
RENT SEEKING
ROM
SACRIFICE
SAMPLE SIZE
SCHOOLING
SCHOOLS
SECONDARY EDUCATION
STANDARD DEVIATION
STANDARD DEVIATIONS
STANDARD ERRORS
STATISTICAL SIGNIFICANCE
STRUCTURAL MODELING
SUPPLY CURVE
TIME SERIES
TRANSITION ECONOMIES
UNEMPLOYMENT
VALIDITY
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110630123337
http://hdl.handle.net/10986/3483
Description
Summary:This paper incorporates morality -- defined as lower utility from consuming goods obtained through appropriative rather than productive activities -- into a simple static general equilibrium model in which agents choose whether to be producers or appropriators. The authors analyze the relationship between the correlation between morality and human capital on the one hand, and aggregate economic performance on the other. They show that there is a main effect that tends to cause this relationship to be positive, and that there can be secondary effects that can either rein-force or oppose (or even overbalance) the main effect. They test the theory using the World Val-ues Survey as a source of proxies for morality. Using their preferred proxy, they find evidence that higher within-country correlation between morality and ability, holding constant the levels of morality and ability, increases per-capita income levels. Under the preferred specification, a one-standard-deviation increase in the correlation between morality and ability raises the log of per-capita income by about one-fourth of a standard deviation, equal to approximately $3,600 for the median income country in the sample. The results are robust to correcting for endogeneity and to changes in sample and specification. The results are mixed when the analysis uses alternative morality proxies, but the coefficient on the morality-ability correlation is still usually positive and statistically significant.

Similar Items