BEHAVIOURAL ECONOMICS

BEHAVIOURAL ECONOMICS

Pauline Grosjean

I am motivated to explain things other economists shy away from. I keep models of behaviour in mind, but I back them up with the rigour of economic analysis.
To truly understand the drivers and constraints of an economy, you have to look at its past. Pauline Grosjean is revealing how a country's cultural legacy influences its economic performance.

According to certain theories, economies in similar countries should behave in similar ways.

In reality, however, we see huge disparities in economic management and growth between nations.

To close this gap, we need to get a clearer picture of the factors that enable some economies to move ahead, and cause others to stagnate.

This means looking directly at a country’s institutions, including governments, political parties and businesses, and at its cultural history.

Associate Professor Pauline Grosjean from the UNSW School of Economics is looking at the complex ways cultural practices and beliefs, which are no longer obvious in a society, can continue to exert impacts on the economy, often for multiple generations. 

As an example, Grosjean points to the high rates of gun crime and homicide in the United States.

Interpersonal violence is usually a result of a lack of institutional structures, such as police forces and law courts, which help a person protect their property. However, the US has these institutions. Instead Grosjean’s work has pinpointed culture as the main driver of its high rate of violent crime.

Hundreds of years ago in the American ‘wild west’, people had to use weapons to protect what was theirs. That cultural influence remains strong today.

Grosjean’s diverse studies, which typically challenge conventional wisdom, are international in scope. Following the Arab Spring, she began investigating economic inequalities in the Middle East and North Africa and helped disprove the commonly held view that only poor people vote for Islamic political parties.

Her research suggests wealthy people, keen to avoid tax, are usually quite supportive of the minimal role of the state championed by Islam-based political movements.

She believes Australia, too, is subject to powerful historic influences – particularly in relation to gender roles.

“As an outsider, you see that gender relations here are a bit awkward,” Groesjean says. “There are few cross-gender friendships and there is a very macho culture, that women buy into.”

The French-born economist says this is largely the result of Australia’s history as a penal colony, where men grossly outnumbered women throughout the 18th and 19th centuries.

The long-term effect is fewer women in positions of power, and clearly defined ways for women to act and be treated in the home and workplace. It may also have led to the prioritisation of specifically male types of industries such as mining and manufacturing.

“All of this is relevant because people are saying the current male bias sex ratios in China and India are counterproductive, but temporary,” Grosjean says. “However, my work says they can have very long-term, multi-generational, legacies.”

“I am motivated to explain things other economists shy away from,” she says. “I keep models of behaviour in mind, but I back them up with the rigour of economic analysis. It would be nice if my work made people think about the way they behave, and the fact that many behaviours do not necessarily serve their interests.”