Culture versus economics

As a business journalist, I’m a big believer in the power of economics. I’m also not a big fan of culture. Sure, it’s fine when it comes to entertainment, but I don’t trust culture as an explanation of behavior.

Many habits which are routinely attributed to culture can be better explained by economics. Take, for example, the issue of saving money. According to some people, saving money is a Asian cultural value, or a Chinese cultural value.

But saving money can also be attributed to economic forces — recent economic problems, combined with current wealth and doubts about the future.

In the United States, we’ve seen high levels of savings after the Great Depression, for example, and with recent immigrants. My immigrant parents, for example, have a high propensity for saving money and being thrifty. I myself, having grown up in the United States, have no memory of hardship, and few doubts about my future earning potential. This creates a little bit of friction between me and my parents — my mother routinely reminds me to save money and warns me not to waste it.

To some, this would be an example of the “cultural wars” between immigrant parents and their children. To me, it’s just an example of the different economic realities in which we live.

Another example is career choice. My father was very concerned that I grow up to be an engineer. This is common for many immigrant parents — as well as parents in China and India and other emerging economies. A couple of generations back, most American parents were very concerned about raising children to be white-collar professionals — doctors, lawyers, and engineers. Personal fulfillment took a second seat compared to long-term income potential and career stability.

When I chose to drop out of the engineering program to follow my dream of being a writer, my parents were very concerned about the risks this career path involves.

In China, I also meet lots of young people pressured by their parents into careers that they don’t want. This is often seen as an example of the Chinese cultural value of listening to your parents, or being conservative and not creative in making career choices. But if you go back to the United States in the 1950s — not to mention the many examples of immigrant families like mine — the same issues come up. How much risk is a person willing to take on?

I would say that children listen to their parents to about the same extent, regardless of whether they live, depending on how much of an economic impact their parents have on them. Today, in the United States, many parents tell their children to be happy — to find a career that is fulfilling and rewarding, not just financially renumerative.

This brings me to yet another value that is often ascribed to culture — the relative importance of personal happiness compared to family commitments.

Again, I feel that the basic issue is economic — when the family is the primary economic unit, it makes sense to protect it at all costs. In underdeveloped countries, the family takes care of the sick and elderly, protects its members from physical violence, provides career training to children, feeds and clothes its members, provides work, and provides money. In a developed country, governments and private pensions take care of retirement, doctors and hospitals take care of the ill, police departments protect citizens against violence, schools and colleges provide career training, banks lend money, and restaurants and delivery services provide all the food that anyone would want, at any price point.

In a developed country, the role of the family is to provide emotional support — to ensure that its members are happy and loved.

It makes sense for people in a developed country to ignore the wishes of a family that is pressuring them to do something that would make them unhappy — including adopting a boring career, or marrying someone they don’t love.

In an underdeveloped country, it makes sense to put personal fulfillment aside to take care of more pressing needs for physical and financial security.

In China, as with immigrant families in the US and Europe, the economic reality is changing very quickly — and personal behavior is changing to keep up.

Ascribing the changing behaviors to changing cultural norms is a mistake, and often results in absurd reactions such as blaming US movies, music and television for the “declining cultural values.”