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Ceteris Paribus and Fixed Effects in Regional and Cultural Economics

Part of the New Frontiers in Regional Science: Asian Perspectives book series (NFRSASIPER,volume 47)

Abstract

This chapter is inspired by Peter Nijkamp’s contribution “Ceteris Paribus, Spatial Complexity and Spatial Equilibrium” and his original take on the deficiencies of using the ceteris paribus assumption in regional economic modelling. After summarizing Nijkamp’s interpretative perspective of the ceteris paribus assumption within theoretical modelling, I suggest an analytical analogy between the ceteris paribus assumption in theoretical modelling and the use of fixed effects in empirical modelling. I argue that fixed effects have the economic meaning of the ceteris paribus assumption in empirical work and could lead to erroneous implications in empirical results, especially with regard to understanding cultural relativity across space. The chapter illustrates this point through an example focused on religion as one of the most important proxies for culture in the economic literature. The operationalization of the example draws on data from the World Value Survey (WVS) and employs detailed data decomposition and logistic regression analyses. The use of fixed effects is contrasted to precise quantification of cultural interactions, cultural relativity and cultural hysteresis. The chapter shows how significant effects from cultural complexity can be lost or overseen in the interpretative analysis of empirical findings when fixed effects are used in the spirit of the ceteris paribus assumption.

Keywords

  • Ceteris paribus
  • Fixed effects
  • Religion
  • Culture
  • Decomposition
  • Logistic regression
  • Cultural interactions
  • Cultural complexity
  • Nonlinearity

JEL

  • Z10
  • R11

To Peter, with gratitude

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Fig. 10.1
Fig. 10.2
Fig. 10.3

Notes

  1. 1.

    Tubadji (2012, 2013) defines culture and cultural capital, explaining how the latter is the potential of the former to influence the reality and defines the composition of culture into four main subdomains: living culture and cultural heritage, respectively, each being in tangible or intangible form. Besides this complexity, each of these subdomains is built of a wealth of attitudes and their related beliefs and norms, which sometimes have different direction of impact, see Tubadji and Pattitoni (2020). That is why culture is firstly a complex system itself. Second, due to defining attitudes as the core of this complex system, CBD can be considered a Neo-Weberian paradigm, as Weber (1905) approach to culture defines culture as an attitude to religion. Regarding the role of culture as a proto-institution in the hierarchy of institutions, see Tubadji et al. (2015).

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Appendix: Descriptive Statistics: WVS Individual Level Data

Appendix: Descriptive Statistics: WVS Individual Level Data

Variable Obs Mean Std. Dev. Min Max
Wage 314,846 4.62 2.337 1 10
Age 344,279 40.72 16.135 13 102
age_sq 344,279 1918.43 1487.046 169 10,404
Edu 299,295 4.71 2.229 1 8
Female 343,808 0.52 0.500 0 1
City 229,132 0.58 0.494 0 1
religion_important 348,532 0.67 0.472 0 1
Waves 348,532 4.27 1.432 1 6
wave1 348,532 0.04 0.194 0 1
wave2 348,532 0.07 0.256 0 1
wave3 348,532 0.22 0.416 0 1
wave4 348,532 0.17 0.375 0 1
wave5 348,532 0.24 0.428 0 1
Country 348,532    1 100
  1. Notes: The table presents the main descriptive statistics for the variables form the WVS used on individual level in this chapter

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Tubadji, A. (2021). Ceteris Paribus and Fixed Effects in Regional and Cultural Economics. In: Suzuki, S., Patuelli, R. (eds) A Broad View of Regional Science. New Frontiers in Regional Science: Asian Perspectives, vol 47. Springer, Singapore. https://doi.org/10.1007/978-981-33-4098-5_10

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