The Hayek–Friedman hypothesis states that economic freedom is causally associated with stable democracy. I test a particular element of the hypothesis focusing on press freedom, which is arguably a necessary component of any democratic polity. Combining the Freedom House index of press freedom and the Heritage Foundation Index of Economic Freedom yields a large annual panel dataset between 1993 and 2011. Estimates show that improvements in economic freedom are associated with subsequent improvements of press freedom. The overall association is mainly driven by changes in market openness.

Unrealized potential of entrepreneurial activities in developing countries has often been attributed to missing formal market-based institutions. In new institutional economics, the concept of ‘voids’ is suggested to describe the absence of market-based institutions. In reality, however, ‘institutional fabrics’ are always and necessarily complex and rich in institutions. No societal sphere is institutionally void. In this article, we contribute to existing literature on entrepreneurship and institutional economics by presenting a framework for studying the richness and complexities of institutional fabrics, as well as ways in which entrepreneurs respond to institutions. Distinguishing four types of institutions relevant for entrepreneurs, we analyze case study data from Ethiopia, and discuss how ‘tensions’ between potentially incompatible institutions result in behavioral frictions. Some entrepreneurs play the complex institutional environment and benefit from the tensions in it, whereas others may drown into the institutional ‘swamp’ they face. Policy makers should acknowledge that institutions not only result from formal policy making and that in many cases a diverse set of institutions is needed to facilitate market exchange and solve constraining tensions. The diversity that results from initiatives of institutional entrepreneurs may create a more effective institutional environment for development.

Professor McCloskey makes many telling and insightful points in her survey and criticism of what she terms the new institutional economics; yet there are a number of shortcomings to her paper. One is that she has bundled together a variety of quite disparate approaches to the role institutions play, and refers to them as ‘neo-institutionalist’. We unbundle these different strands, and show that an undifferentiated critique is unwarranted. A second argument made by her is that an institutional approach cannot explain either the Industrial Revolution or what she calls ‘the Great Enrichment’. We show that this conclusion is unwarranted and results from an overly narrow definition of institutions.

This paper explains how informal institutions influence the reaction to the COVID-19 pandemic and the response to formal restrictions. I claim that it is not enough to introduce countermeasures, as individuals must follow them if they are to be effective. The acceptance of such measures is reflected in individuals' degrees of mobility decrease and contact reduction, the aims of governmental restrictions. I identify a group of attitudes connected with individuals' responses that differ across countries. They are associated with social relations and approaches to dealing with problems. The analysis confirms that formal restrictions can be seen as successful only if they are supported by strong informal institutions. In some cases, they even define individuals' reactions more than formal recommendations. The findings are useful not only for explaining the special case of reaction to pandemic restrictions but also for investigating what generally determines individuals' compliance with formal rules.

This paper analyzes the relation of culture, institutions and economic development using the example of Indonesia. The success of economic catch-up development depends essentially on the interconnection between pre-existing informal constraints on the one hand and novel, imported institutions on the other. Hence culture, understood as the interplay between legal rules and non-legal constraints, has to be considered as an important determinant of economic development and growth. In order to adapt economic policies and thereby prevent institutional traps, which may otherwise hinder economic reforms, it is essential to understand culture and the ways in which different cultural factors support or constrain the functioning of formal institutional settings. Applying a cultural approach to economics in the case of Indonesia's economic development allows for the inclusion of complex cultural conditionality of economic behavior and puts special emphasis on the role of politicians as public and cultural entrepreneurs. Altogether, the example of Indonesia demonstrates once more the necessity to apply a cultural approach to the study of catch-up development in a globalized world.

Can we explain barriers to adaptation of collective action to changes in the natural environment? One reason for adaptation is the impacts of climate change. Ample case study evidence shows that such adaptation is rarely a smooth process. However, generalisable patterns of how and why barriers arise remain scarce. The study adopts a collective action perspective and the archetypes approach in a meta-analysis of 26 selected publications to explain how barriers arise in specific conditions. Focusing on adaptation of water governance in river basins, the study finds 21 reappearing patterns. Less well-established patterns relate to water property rights, hydrological standards, adaptation externalities, non-climatological uncertainty and vertical coordination. Results further show how barriers impede collective action in specific ways. The paper precisely introduces the archetypes approach, and shows that reported problems in adapting collective action under climate change arise from attributes of actors and pre-existing institutions rather than biophysical characteristics.

This paper contributes to the literature on the determinants of trust by investigating how the quality of local services influences individuals’ generalized trust and trust in local governments. Using data from Italian national statistical office (Istat) Aspects of Daily Life survey, after building a new measure for the quality of local services, we study its effect on individuals’ trust using linear regressions techniques. Our findings suggest that good local public services have a positive impact on individuals’ trust, the effect being stronger for trust in local institutions. Our results are robust to potential endogeneity issues, tested using a two-step GMM estimation procedure, and to potential omitted variables bias, according to the method proposed by Altonji et al. (2005).

The slow growth of the stock of human capital in Spain has been related to weak levels of economic development and a low commitment of Spanish institutions to primary education. This paper adds to these explanations by showing that common lands positively contributed to achieving significantly higher levels of both schooling expenditure and literacy rates. By supporting both municipal and households’ incomes, these collective resources sustained not only the local supply of education, but also the demand for it, although their influence decreased over time. Likewise, either low levels of economic development prevented human capital from growing endogenously or demand factors were not as important as previously argued. Lastly, even though the active intervention of the central government was crucial to promote education, its effort was not enough and human capital in Spain lagged behind other European countries in the early stages of economic development.

Hodgson's (2015) critique of extra-legal ‘property rights’ – in this case, so-called ‘economic property rights’ – is right on target. This Comment contributes two further points to his critique. First, the notion of ‘economic property rights’ is based on what Gilbert Ryle (1949) referred to as a ‘category mistake’, conflating physical possession, which is a brute fact about the world, with the right or entitlement to possession, which is a social or institutional fact that cannot exist in the absence of some social contract, convention, covenant, or agreement. The very notion of a non-institutional ‘right’ is oxymoronic. Second, the fact that property is an institutional fact does not mean it must exist with the structure of a ‘state’ (as Bentham suggested). Rather, institutions like ‘property rights’ only require some community, however large or small, operating with what Searle (1995; 2005) calls collective intentionality and collective acceptance, according to shared ‘rules of recognition’ (Hart, 1997).

In Western societies, in-kind gifts are generally more common than money gifts. However, exchange of in-kind gifts potentially involves inefficiency. Several models have been suggested to explain the in-kind gift-giving practice as a rational behaviour under certain assumptions about givers’ preferences and information and/or technological constraints. Unlike many Western societies, China has a long tradition of money gift-giving. So-called red packets are commonly exchanged. We argue that models developed to rationalise Western norms of gift-giving cannot fully account for Chinese gift-giving practices, and some Chinese practices even contradict existing theories. We collect Chinese household data through two surveys to establish stylised facts about gift-giving. We find that money gifts are commonly appropriate, depending on the occasion and relationship between givers and receivers. Moreover, for every occasion and relationship, money is more appropriate than gift vouchers. Finally, unlike studies focusing on Western gift-giving, our study finds no evidence that givers need to compensate receivers with higher value when giving money gifts rather than in-kind gifts. Our results are consistent with the view that the acceptability of money vis-à-vis in-kind gifts is governed primarily by social convention rather than information and technological constraints or the specific preferences of givers.

Laying the foundations of property rights economics stands out among Ronald Coase's many seminal contributions. This approach had an impact on a number of fields in economics in, particularly, the 1960s and 1970s. The modern body of property rights economics mainly originates in the work Oliver Hart and is quite different in style, scope, and implications from the original property rights economics of Coase, Demsetz, Alchian, Cheung, Umbeck, Barzel, etc. Based on our earlier work on the subject (Foss and Foss, 2001), we argue that the change from Mark I to Mark II property rights economics led to a substantial narrowing of the scope of property rights economics, somewhat akin to a Kuhnian loss of content. In particular, Mark II property rights economics make strong assumptions concerning the definition and enforcement of ownership rights made which lead to many real life institutions and governance arrangements being excluded from consideration, and a much more narrow focus than that of the rich institutional research program initiated by Coase and his followers.

Individualistic values are often presented as promoting economic development; however, their links to relevant behaviour and preferences at the micro-level remain under-explored. Here we investigate the relationship between individualistic values and personal attitudes towards reporting corruption. Unlike much of the previous research which focuses on attitudes towards corruption, we analyse the micro-level mechanisms relating to one's willingness to escape the status quo and act against corruption. We also focus on a region associated with persistently high levels of perceived corruption. Our findings indicate that individualism is associated with a greater likelihood to act against corruption. The effect estimated is small but highly significant and robust to changes in estimators and specifications. We also find evidence that institutional trust and individualism strengthen each other to generate greater willingness to report corruption.

Economics has tended to neglect giving, and thus both its important contemporary economic role and its potential contribution to alternative, non-market systems. To remedy this, it will need to draw on the broad debates on the nature of the gift that have developed in and across the other social sciences. This paper addresses several of these by asking how we should define the terms gift and giving. It rejects definitional associations of giving with obligation, reciprocity and the development of social relationships. Such definitions exclude many phenomena commonly understood as giving and underpin misguided attempts to analyse gifts in contemporary late-modern societies in terms derived from anthropological discussions of very different societies. Instead, the paper develops a definition of the gift based on contemporary giving institutions. A more open, contemporary definition of the gift helps to sensitise us to the continuing importance of gift institutions in social and economic life.

We examine an aspect of the argument of Teppo Felin and Nicolai Foss (‘The Endogenous Origins of Experience, Routines, and Organizational Capabilities: The Poverty of Stimulus’; 2011) where they reject the claim of Geoffrey Hodgson and Thorbjørn Knudsen (‘Darwinism, Causality and the Social Sciences’; 2004) that habits depend crucially on stimuli from the social environment. We argue that while rightly stressing human agency they also create a false dichotomy between agential and environmental factors in the explanation. Felin and Foss create further confusion by hinting – without adequate clarification – at an untenable notion of human agency as an uncaused cause. We raise several questions of clarification for these authors.

Along with introducing democracy, advancing philosophy and excelling at the arts, during the period 800–300 bce ancient Greece achieved substantial economic prosperity. Recent literature attributes the efflorescence to the institutions and culture of democratic city-states. However, the city-states failed to initiate sustained growth. Technological progress remained slow and the economic efflorescence ended after the prevalence of Macedon and the subsequent Roman conquest. The present study scrutinises the roles of city-state institutions and culture. It shows that ultimately ancient Greece could not sustain long-run growth because a multitude of independent small city-states prevented the exploitation of economies of scale and stoked continual wars that exhausted them financially and militarily, and because of a culture valuing landholding, self-sufficiency and collectivist attitudes.

We forward the hypothesis and empirically establish that variations in the strength of family ties are rooted in culture. In particular, we show that individualism is associated with looser family ties. We exploit the associations between contemporary individualism and historical climatic and disease environments to establish a causal relationship. At both the individual- and country-levels, we find strong support that individualism reduces family ties. The estimated effects are economically large and robust to a wide variety of potentially confounding variables.

Copyright laws traditionally attempt to incentivize expression and minimize free rider problems through legal restrictions, at the expense of closing off access to cultural history. However, entrepreneurial changes to institutions and the creation of alternative governance structures can allow for spaces that facilitate expression without resorting to the copyright approach. Wikipedia, the free online encyclopedia, stands as a highly visible example of such institutional entrepreneurship, leveraging copyright law against its intended purpose. This paper uses the Bloomington School's IAD framework to explain the success of Wikipedia's alternative model of managing a common resource of free encyclopedia articles, and suggests a roadmap for understanding the role of institutional entrepreneurship in crafting alternative governance structures to foster expression.

A main instrument for better understanding the formation of institutions, and explaining the differences in their long-run development between periods and societies, would be to use history as a laboratory, allowing us to test the hypotheses developed in the social sciences. This paper discusses the study by Douglas Allen, The Institutional Revolution, in that context, in order to identify some of the pitfalls in the current attempts by economists to use historical analysis. Next, the paper places his English case into a comparative perspective, helped by the recent insights gained by economic and social history, to see how these pitfalls can be avoided. Based on this, I argue for comparisons at the regional, national and global levels, and for a multidimensional view which includes social contextualization, combined with an open eye for discontinuity in long-run patterns, in order to avoid one-dimensional and teleological approaches to institutional change.

This paper develops an account of the normative basis of priority setting in health care as combining the values which a given society holds for the common good of its members, with the universal provided by a principle of common humanity. We discuss national differences in health basket in Europe and argue that health care decision-making in complex social and moral frameworks is best thought of as anchored in such a principle by drawing on the philosophy of need. We show that health care needs are ethically ‘thick’ needs whose psychological and social construction can best be understood in terms of David Wiggins's notion of vital need: a person's need is vital when failure to meet it leads to their harm and suffering. The moral dimension of priority setting which operates across different societies’ health care systems is located in the demands both of and on any society to avoid harm to its members.

The literature on the determinants of cross-country variation in financial system development identifies historical institutional factors, mostly rooted in colonial effects, as key causes. Using a sample of 39 African former European colonies for 2006–11, this paper investigates the extent to which the historical institutional determinants identified by legal origins, disease endowment, religion-based and ethnic fractionalisation theories explain current differences in financial system development across Africa. While most existing research focuses only on one financial system development dimension, namely financial system depth, this article considers also financial system access. The results do not support any of the above theories when depth measures are used, while three of them (legal origins, disease endowment and ethnic fractionalisation theories) are validated when using access measures. This suggests that in Africa financial system depth and access do not have common historical institutional determinants, pointing to the need for greater fine tuning of prevalent theories and empirical measures.