Extended Data Table 3.
Institutional and Cultural Determinants of PRV
Dependent variable is PRV in 2003. Our approach follows recent advances in the economic literature on institutions and culture (see Supplementary Analysis for details and references). Models (1) to (6) are OLS; models (7) to (10) use instrumental variables to identify causal relations. All regressions control for legal origin (French, British, German, Scandinavian). Model (1) shows that both a frequently used measure for institutional quality (Constraint on Executive) and a frequently used measure for culture (Individualism) are significantly correlated with PRV. Model (2) shows that past institutional quality (Constraint on Executive in 1890-1900) can have long-lasting effects on PRV. Models (3) to (6) control for important variables proposed in the literature. Models (7) to (10) report the results from instrumental variable estimation (instrumented variables are in bold); the instruments are assumed to have no direct impact on PRV but only on the explanatory variable and thereby allow identifying a causal effect of either institutions (as measured by Constraint on Executive) or culture (as measured by Individualism) on PRV. Model (7) instruments institution with ‘settler mortality’ in European colonies (1600-1875). To preserve degrees of freedom we do not include Individualism. Model (8) uses language (grammatical rules) and model (9) genetic distance as an instrument for culture. Model (10) uses both instruments. Models (7) to (10) suggest causal effects of both the quality of institutions and culture (Individualism) on PRV.
| (1) | (2) | (3) | (4) | (5) | (6) | (7) IV: Sett. Mortality |
(8) IV: Gram. Rule |
(9) IV: Gen. Dist. |
(10) IV: Gen. Dist. + Gram. Rule |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Const. on Executive (1990 to 2000) |
−0.25*** (0.05) | −0.23*** (0.07) | −0.21*** (0.05) | −0.09*** (0.03) | −0.25*** (0.05) | −0.72*** (0.12) | −0.25** (0.11) | −0.23*** (0.08) | −0.25** (0.11) | |
| Individualism | −0.03*** (0.00) | −0.03*** (0.01) | −0.02*** (0.01) | −0.02*** (0.00) | −0.01** (0.00) | −0.03*** (0.00) | −0.06* (0.03) | −0.05** (0.03) | −0.06** (0.03) | |
| Const. on Executive (1890 to 1900) |
−0.26*** (0.06) | |||||||||
| Primary Education (1930) |
−0.02*** (0.00) | 0.01 (0.02) | 0.00 (0.02) | 0.01 (0.02) | ||||||
| GDP p. capita (PPP in $ 1000) |
−0.07*** (0.01) | |||||||||
| Gov. Effectiveness (2000) |
−1.10*** (0.07) | |||||||||
| Ethnolinguistic Fractionalization |
0.41 (0.38) | |||||||||
| Constant | 2.14*** (0.26) | 1.67*** (0.17) | 2.20*** (0.30) | 2.02*** (0.22) | 0.59*** (0.19) | 1.91*** (0.33) | 3.79*** (0.53) | 2.69*** (0.56) | 2.67*** (0.51) | 2.68*** (0.51) |
|
| ||||||||||
| Controls for Legal Origin | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
|
| ||||||||||
| N | 96 | 44 | 79 | 96 | 96 | 96 | 60 | 59 | 79 | 59 |
| R2 | 0.681 | 0.810 | 0.785 | 0.824 | 0.904 | 0.685 | 0.131 | 0.633 | 0.673 | 0.652 |
| 1st-stage F-stat | 12.4*** | 60.3*** | 51.7*** | 68.4*** | ||||||
| Overid test p-value | 0.907 | |||||||||
P < 0.10,
P < 0.05,
P < 0.01