Journal of Business Accounting and Finance Perspectives

(ISSN: 2603-7475) Open Access Journal
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JBAFP 2021, 3(1), 2; doi: 10.35995/jbafp3010002

Uncertainty Shocks, Cultural Behaviors and Economic Development

1 Department of Economics, National and Kapodistrian University of Athens, PC 10562 Athens, Greece
2 Department of Business Administration, Hellenic Open University, PC 10562 Patras, Greece;
* Author to whom correspondence should be addressed.
Received: 13 Jan 2021 / Revised: 11 Mar 2021 / Accepted: 18 Feb 2021 / Published: 15 Mar 2021
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The literature regarding cultural background change points out that changes in cultural background can only be slow moving. However, under high uncertainty levels, cultural background may change in the short or medium term as well. In this paper, the effects of uncertainty on cultural behaviors are investigated. Cultural background is captured through the Schwartz’s cultural values, based on the waves provided by the European Social Survey from 2002 up to 2018, performing relative Principal Component Analyses. An Uncertainty Index is constructed based on the volatility of the stock market for all Eurozone countries, from the euro’s adoption in January 2001 up to December 2018. Using an unbalanced panel dataset comprised of 18 Eurozone countries for the time period from 2002 up to 2018, a fixed-effects assessment method, different fixed terms between the examined economies, dummies per wave of the nine total data waves of the European Social Survey and country-specific clustered robust estimates of the standard errors, the main conclusions of the empirical analysis are the following: (a) Uncertainty significantly affects the cultural background of societies and leads to its change; (b) The effects of uncertainty on culture start two years after an uncertainty shock has occurred; (c) The effects of uncertainty on specific cultural values reveals significant effects on all Schwartz’s cultural values. However, the effect is the highest for the dipole “conservatism and autonomy” and the smallest for the dipole “mastery vs. harmony”. (d) When uncertainty is high, this leads to higher levels of hierarchy (authority, humbleness), self-direction (independent thought and action), stimulation (excitement, novelty and challenge in life), affective autonomy (pursuit of actively positive activities: pleasure, exciting life) and mastery (ambition and hard work, daring, independence, drive for success) which means their life’s harmony is disrupted, at least two years later. Thus, countries exhibiting systematically high levels of uncertainty are about to develop a cultural background that is going to hinder economic development, and vice versa.
Keywords: uncertainty; culture; economic development; financial crisis; COVID-19
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).
Kostis, P.C. Uncertainty Shocks, Cultural Behaviors and Economic Development. JBAFP 2021, 3, 2.
Kostis PC. Uncertainty Shocks, Cultural Behaviors and Economic Development. Journal of Business Accounting and Finance Perspectives. 2021; 3(1):2.
Kostis, Pantelis C. 2021. "Uncertainty Shocks, Cultural Behaviors and Economic Development." JBAFP 3, no. 1: 2.
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