Are freedom and trust linked to social values and support for free markets?

In my last post I presented a table showing that countries in which people have strong social values tend also to have high proportions of the population supporting free markets. Unfortunately, that table is difficult to read because of the amount of information it contains, so I am presenting a ‘pruned’ version below.


Apart from presenting fewer indicators, the main difference has to do with the ranking of countries. In my last post, the countries are ranked according to levels of interpersonal trust. In the table below, the countries are ranked by an index (not shown) that gives equal weight to interpersonal trust and feelings of individual agency. As before, each entry in the table is presented against a green, yellow, orange or red background depending on how favourable it is to either the market economy or community values.

The table suggests that values supporting both community and free markets tend to be stronger in countries in which there are relatively high levels of trust (or absence of distrust) and relatively strong feelings of individual agency (a high proportion of individuals who feel that they have some freedom of choice and control of their lives). It seems reasonable to expect that societies that encourage tolerance and respect for others, as well as confidence in the justice system, would tend to foster both trust and the feelings of agency that are necessary for entrepreneurial innovation. Paul Zak and Stephen Knack noted that high levels of trust are favourable to economic activity because they reduce transactions costs (‘Trust and Growth’, The Economic Journal, 2001). Zak has argued subsequently that moral behaviour - i.e. trustworthy behaviour - is necessary to reduce cheating without exorbitant transactions costs. It also enables employees, for example, to be given greater opportunities for self-direction (Zak, ‘Moral Markets’, 2008, xvii and 273).

Favourable economic outcomes generated by relatively high levels of trust and strong feelings of individual agency could be expected to generate attitudes more favourable to the functioning of a market economy. As noted in a recent post, individuals with relatively strong feelings of agency tend to have favourable attitudes towards markets.

The next step in the analysis is to consider the available evidence on changes over time. What changes have occurred in community values in market economies over the last couple of decades?

Why do people in countries with strong social values tend to support free markets?

This question presupposes that people in countries with strong social values do actually tend to support free markets. Some evidence in support of this is provided in the table below.


The table has been constructed from information in the World Values Surveys conducted in 2005 to 2008. Countries are ranked by levels of inter-personal trust i.e. the percentage of people who are more inclined to agree with the proposition that ‘most people can be trusted, rather than that ‘you can’t be too careful’. Each entry in the table is presented against a green, yellow, orange or red background depending on how favourable it is to either the market economy or community values. Further information about the definition of the variables in the tables may be obtained from the last couple of posts (here and here).

Hint: If you click on the table you might still need a magnifying glass to read it!

The fact that there is more green and yellow at the top of the table and more red and orange at the bottom reflects a positive relationship between values supporting the market economy and community values. Why is this so? I suspect the answer has to do with the development of institutions that support both inter-personal trust and strong feelings of individual agency.

I will write more about this later (and possibly present some information from the table in a more readable form).

Do people who have negative attitudes toward wealth accumulation have greater concern for community?

If people are cynical about the potential for everyone to share in the benefits of wealth creation it might seem reasonable to expect they would tend to have relatively more concern for community. If they think it is only possible for individuals to get rich at the expense of others, it might be reasonable to expect them to have a particular concern for helping other people and/or protecting the environment. On the other hand, as noted at the end of my last post, people who have strong feelings of individual agency - who tend to have positive attitudes toward wealth accumulation – do not tend, as a group, to be particularly selfish in their attitudes.


The simple analysis I have used to test these conjectures has involved comparing responses in the World Values Survey (WVS) to a range of questions relating to attitudes toward community of people with relatively negative and relatively positive views about capital accumulation. In asking about attitudes toward wealth accumulation, the WVS specifies a rating of 1for agreement that ‘people can only get rich at the expense of others’ and of 10 for agreement that ‘wealth can grow so there’s enough for everyone’. Data used in this exercise are from the 2005-2008 survey covering about 75,000 people in 57 countries.

The results of the exercise are reported in the following chart. For the purpose of constructing the chart, responses to the capital accumulation question of 1 to 3 have been labelled ‘negative’ and responses of 8 to 10 have been labelled ‘positive’.

The chart suggests that there isn’t much difference, on average, between the social values of people with positive and negative attitudes towards capital accumulation. People with positive attitudes seem to somewhat less selfish than those with negative attitudes on all the items considered.

Some readers might be wondering whether this finding reflects a greater concentration of people with negative attitudes toward capital accumulation in countries in which the social fabric tends to be weaker. If that is so, it is not likely to be entirely coincidental. The question deserves further research.

Are attitudes towards success, wealth accumulation and competition linked to feelings of individual agency?

People with strong feelings of agency feel that they have a great deal of choice and control over the way their lives turn out. As shown in the charts below, such people tend to have more positive attitudes toward hard work and success, wealth accumulation and competition. However, people who do not feel that they have a great deal of choice and control do not, in general, seem to be particularly cynical; they are just tend to be less positive than those with strong feelings of agency.


Readers who would like to know why I am considering questions such as this might find an answer in an earlier post.

The data used in this exercise are from the World Values Survey 2005-2008 which surveyed about 75, 000 people in 57 countries. The question concerning feelings of agency asks respondents how much freedom of choice and control they feel over the way their lives turn out. A rating of 1 means none at all and a rating of 10 means a great deal. The average rating is 7. Ratings of 1 to 4 are relatively uncommon and responses with those ratings have been aggregated in the charts shown below.

The first chart shows how responses relating to attitudes towards the relationship between hard work and success vary among people with stronger and weaker feelings of personal agency. The survey asks whether respondents agree with the statement ‘hard work brings success’. A rating of 1 means that ‘in the long run hard work usually brings a better life’, whereas a rating of 10 means that ‘hard work doesn’t bring success – it is more a matter of luck and connections’. Ratings have been aggregated in the chart to show the differences more clearly; ratings 1to3 have been labelled ‘positive’, ratings 4 to 7 have been labelled ‘mixed’ and ratings 8 to 10 have been labelled ‘negative’. The data in each of the charts add to 100% on the depth access (i.e. for each level of agency, the red, blue and green columns added together equal 100%) .

The second chart shows how responses related to attitudes toward wealth accumulation vary among people with different feelings of agency. The survey question asking about attitudes toward wealth accumulation specifies a rating of 1for agreement that ‘people can only get rich at the expense of others’ and 10 for agreement that ‘wealth can grow so there’s enough for everyone’. Ratings 1-3 have been labelled ‘negative’, ratings 4-7 have been labelled ‘mixed’ and ratings 8-10 have been labelled positive.

The third chart shows how responses related to attitudes toward competition vary with agency. The survey question specifies a rating of 1 for agreement that ‘competition is good; it stimulates people to work hard and develop new ideas’ and of 10 for agreement that ‘competition is harmful; it brings the worst in people’. Ratings have been aggregated and labelled as for the first chart.

The pattern shown in all three charts is fairly similar with people who have strong feelings of agency tending to have more positive attitude toward success from hard work, wealth accumulation and competition. This result was much as I had expected but I had thought the attitudes shown by people with relatively low agency might be somewhat more negative than they appear to be.

What do the results mean? Previous research has suggested that feelings of agency are related to the amount of freedom that people actually experience in their lives. The results suggest that people who feel a lot of freedom tend to have more positive attitudes toward success from hard work, wealth accumulation and competition.

Previous research suggests that people who have strong feelings of agency are not particularly selfish in their attitudes. I wonder whether that is also true of people who have positive attitudes toward wealth accumulation.

Postscript:
That question is followed up here and here.