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May 30, 2007

Was Weber Wrong?

A fascinating little idea here from a new paper:

Max Weber attributed the higher economic prosperity of Protestant regions to a Protestant work ethic. We provide an alternative theory, where Protestant economies prospered because instruction in reading the Bible generated the human capital crucial to economic prosperity. County-level data from late 19th century Prussia reveal that Protestantism was indeed associated not only with higher economic prosperity, but also with better education. We find that Protestants’ higher literacy can account for the whole gap in economic prosperity.

As we tend to foget in these modern irreligious times one of the great differences between Catholicism and the various flavours of Protestantism ( and very much within them too, a further test could be made, if the records are available, of whether, say, Calvinism or Lutheranism was more likely to lead to higher economic prosperity than, say, High Church Anglicanism) over the Bible.

The Church (as she then was, not so much of the "the" after the 15th century) did not allow (as various people burnt at the stake found out) the Bible to even be translated into the vernacular, let alone recommend it as something that the common man might actually read. The intervention of that priestly class  was necessary. Protestant beliefs were more along the lines that as this was the word of God, as it was plain and simple, then each man not only could, but should, read it directly and learn thereby.

What this paper seems to be saying is that it is that simple higher literacy which led to the higher growth rates of the Protestant nations: not (as far as I remember him) Weber's thoughts on how the religion's ideas about deferred gratification and so on influenced behaviour.

If it turns out to be true then Hurrah! Fewer undergrads will have to slog though Confucianism and Taoism (as I did)  and thus risk being turned off the whole subject all together.

May 30, 2007 in Economics | Permalink


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But if you got a taste for intellectual work and education from learning to read, and then practising that skill, and then discussing it all, ... well, you might end up with a Protestant Work Ethic anyway. No controlled experiments => truth hard to come by.

Posted by: dearieme | May 30, 2007 2:22:48 PM

"County-level data from late 19th century Prussia reveal that Protestantism was indeed associated not only with higher economic prosperity, but also with better education. We find that Protestants’ higher literacy can account for the whole gap in economic prosperity."

I'm open to persuasion but I've a problem with that argument because of this:

As is widely recognised, Britain's industrial revolution was a pioneering achievement but consider this literature survey for the Economic History Society of the causal connections between education and economic development in Britain:

"We have noted a substantial body of original research . . . which found that stagnant or declining literacy underlay the 'revolution' of the late eighteenth and early nineteenth centuries. . . Britain in 1850 was the wealthiest country in the world but only in the second rank as regards literacy levels. [Nick] Crafts has shown that in 1870 when Britain was world economic leader, its school enrolment ratio was only 0.168 compared with the European norm of 0.514 and 'Britain persistently had a relatively low rate of accumulation of human capital'."
Sanderson: Education, economic change and society in 1780-1870 (Cambridge UP, 1995) p.61

Posted by: Bob B | May 30, 2007 2:28:59 PM

The statement that "higher literacy can account for the whole difference" is a bit dogmatic & depends entirely on what multiplier you put to a certain % of literacy increase.

On the other hand Bob B's figures actually fit fairly well with this theory. The important comparison is not literacy with current wealth but with growth rate & child literacy with future growth rate. By 1870 Britain had clearly reached its peak & Germany & the US were the rising economic powers.

Posted by: Neil Craig | May 30, 2007 3:34:16 PM

I'm pretty sure I've seen this before on some econoblog or other.

Posted by: Marcin Tustin | May 30, 2007 4:25:35 PM

"Higher literacy can account for the whole gap in economic prosperity".

Sadly the paper doesn't seem to be available online. But it's hard to see how one could possibly prove this assertion without an awful lot of ad hoc assumptions.

It also seems conveniently in line with prevailing ideological preferences. I.e. it's all about education. The implication - that we don't need an individualistic ethos to get good economic growth, just lots of education - is one which the Left would no doubt welcome. Harder to imagine research getting done which "proved" the opposite.

Posted by: Fabian Tassano | May 30, 2007 5:46:39 PM

"I'm pretty sure I've seen this before on some econoblog or other."

That wouldn't be surprising.

Never mind Max Weber for the moment and consider the present instead.

Whether more education - such as longer and better schooling followed by higher education - is a cause or a consequence of more affluence and higher GDP growth is a recurring topic in many mainstream academic texts - like DN Weil: Economic Growth (Addison Wesley 2004) or Robert Barro: The Determinants of Economic Growth (MIT Press 1997).

The evidence in cross-country studies is not absolutely decisive. The notorious reference in a Gordon Brown speech to "post-endogenous growth theory", drafted by Ed Balls, was intended to stake out a rationale for claiming that more education and better standards would improve national economic performance but lately endogenous growth theory has come under critical attack:

What can hardly be disputed on the evidence is that, in Britain, on average graduates earn more pay over lifetime employment than non-graduates:

"University graduates earn on average about a quarter more than young people who leave school after their A-levels, a study has suggested. Higher education organisation Universities UK measured the economic impact of getting a degree. It found average additional earnings of £160,000 over a working life. But there are very wide variations - with arts graduates only gaining a tenth of the additional earnings received from a medicine degree. . . "

Despite that:

"The government is concerned about a growing gender gap in higher education, after 22,500 more young women than men won places at university last year. Ministers fear men will struggle to get good jobs in future as growing numbers of teenage boys decide against degrees."

But then:

"The latest data on graduate employment is both good news and bad news for students. The positive aspect is that graduate-level vacancies in 2007 are expected to increase by 15% over last year. The negative is that this is not matched by a similar rise in graduate salaries. According to the Association of Graduate Recruiters - which represents the bigger recruiters - the median graduate starting salary is predicted to increase by just 2.1% to £23,431."

Posted by: Bob B | May 30, 2007 6:07:27 PM