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Diversity, identity, and the indeterminacy of the size of nations

A critique of the Alesina school of thought from the viewpoint of evolutionary political economy

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Abstract

Recently economists have explored the impact of ethnic and social diversity on nation size and on the relative efficacy of the production of private and public goods. In a neoclassical framework with perfect and complete information, diversity increases the costs of government, and both the size of government and of the nation are limited. The paper proposes an alternative evolutionary framework building on the economics of identity. With imperfect and incomplete information, the relation between nation size and diversity is indeterminate, because heterogeneity plays an important role for the coordination among actors, and because political organization is crucial for the endogenous formation of preferences.

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Authors and Affiliations

  1. Sino-German School of Governance, Frankfurt School of Finance and Management, Sonnemannstraße 9-11, 60314, Frankfurt, Germany

    Carsten Herrmann-Pillath

  2. Witten/Herdecke University, 58448, Witten, Germany

    Carsten Herrmann-Pillath

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  1. Carsten Herrmann-Pillath
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Correspondence to Carsten Herrmann-Pillath.

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Herrmann-Pillath, C. Diversity, identity, and the indeterminacy of the size of nations. Eur J Law Econ 27, 15–38 (2009). https://doi.org/10.1007/s10657-008-9060-z

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