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Institutions

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Handbook of Cliometrics

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Abstract

Institutions clearly play a major role in economic growth and political development. But much more needs to be done to verify and to clarify their role, and to show that it is causal, and not the result of other factors. The necessary work will involve careful historical research, the assembly of large data sets, and careful econometrics and formal modeling. And it should also involve cooperation with other social scientists, from experimental economics to anthropology and political science.

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Notes

  1. 1.

    For further evidence, see the case study in Acemoglu et al. 2005.

  2. 2.

    North’s most cited article (according to Google Scholar consulted on April 12, 2018) was his 1991 essay on institutions (North 1991), which had 54,008 citations. Fogel’s most cited work was his coauthored book on slavery, Time on the Cross (Fogel and Engerman 1995), which had 1806 citations. As for Arrow, his most referenced publication was his book on his impossibility theorem (Arrow 2012), with 17,983 citations. The citation counts here include references to earlier editions of Time on the Cross and Arrow’s book.

  3. 3.

    Guilds in medieval and early modern Europe provide a striking example of the damage institutions could do, by enforcing monopolies and limiting the supply of skilled workers. That is Sheilagh Ogilvie’s argument (Ogilvie 2004), in response to earlier claims that guilds helped accumulate human capital (Epstein 1998). One could make a similar case for the effect of the institutions that shaped the development of health insurance in the United States, including laws that allowed the use of fringe benefits to get around wartime wage controls and continued tax exemptions for employer provided health care (Thomasson 2003). They led to heavier spending on health care than in other developed economies for health outcomes that were often inferior.

  4. 4.

    Voigtländer and Voth 2006, 2013; De Moor and van Zanden 2010; Foreman-Peck 2011 are the relevant papers here. All were criticized by Dennison and Ogilvie for basing an argument on a generalization that does not hold up to scrutiny. Dennison and Ogilvie also have concerns about Greif (2006b) and Greif and Tabellini (2010), which also mention the nuclear family. But Greif (2006b) links the nuclear family to the corporation, a more limited and defensible claim, and Greif and Tabellini (2010) takes up a different topic – the contrasting way in which cooperation was achieved in China (via clans) and Europe (via cities).

  5. 5.

    There are other worries as well, both for this particular example and for other articles linking past institutions to modern outcomes. First of all, the data (typically urbanization or population densities) is often suspect outside of Europe. Second, the regressions typically involve instruments because institutions are endogenous; the instruments, though, may be problematic as well. See, for example, Albouy 2012.

  6. 6.

    For historical and modern examples of this sort of behavior and a discussion of the relevant literature in experimental and behavioral economics and cultural anthropology, see Hoffman 2015.

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Authors and Affiliations

  1. California Institute of Technology (CalTech), Pasadena, CA, USA

    Philip T. Hoffman

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  1. Philip T. Hoffman
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Correspondence to Philip T. Hoffman .

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Editors and Affiliations

  1. BETA/CNRS (UMR 7522), University of Strasbourg Institute for Advanced Study, Strasbourg Cedex, France

    Claude Diebolt

  2. University of Wisconsin Department of Economics, La Crosse, Wisconsin, USA

    Michael Haupert

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Hoffman, P.T. (2018). Institutions. In: Diebolt, C., Haupert, M. (eds) Handbook of Cliometrics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40458-0_42-1

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