Cultural differences re-examined
I believe that there are important cultural differences that influence all kinds of decisions, including investment decisions and the different policies enacted in different countries. Of course, these cultural differences exist on average and don’t apply to any given individual. If you travel to different countries you will find that there are funny Germans, introverted Italians, teetotalling Irish, rude Canadians, and quiet Americans. You just have to look a bit harder to find them, but they exist.
There are two commonly used classification systems to elicit cultural differences. On the one hand, the big five personality traits used in personal psychology: Openness, Conscientiousness, Extroversion, Agreeableness, and Neuroticism (OCEAN). If you don’t know what these terms mean, you can look them up here. And then there are the six cultural dimensions as defined by social psychologist Geert Hofstede: Individualism, Power Distance, Masculinity, Uncertainty avoidance, Long-term Orientation, and Indulgence.
Now, a group of researchers has claimed they could identify another set of five cultural traits that explain national differences in values, and economic and social development better than Hofstede’s system or the big five personality traits. Using a combination of data from the World Values Survey, national census data, and machine learning methods, they have come up with the following five personality archetypes:
Overcontrolled: People who are low on openness and neuroticism, i.e. they are not very adventurous or curious, but also not very sensitive and rather forgiving in their dealings with other people.
Undercontrolled: People who are low on conscientiousness and agreeableness but high on extraversion and neuroticism. These are the people most of us find hard to deal with. They are impulsive, emotional, insensitive, but sometimes also genius.
Anxious introvert: People who are low on extroversion but high on neuroticism. These are people who are more reserved and at the same time sensitive and nervous. In other words, these are what we would normally call wallflowers.
Undirected introvert: People who are low on extroversion and low on conscientiousness, otherwise known as flaky people and daydreamers.
Resilient: These are people who score low on neuroticism and high on the other four trades. In other words, these are the people every gets along with and who get along with everyone else.
The new research looked at the information from more than 5 million people in 47 countries to determine the average psychological make-up of each country. The chart below summarises the five dimensions for a set of developed countries but feel free to look up your nationality in the link to the note above. Note that in the chart below I have coloured Anglo-Saxon countries (USA, UK, and Australia) in dark green, continental European countries (Germany, France, and Italy) in light green, and Asian countries (China, Japan, and Korea) in blue.
Weight of personality archetypes in different countries
Source: Midgley et al. (2022)
Looking at the charts we note that in every country, the overcontrolled dimension has by far the largest weight of all five personality archetypes. But in Asian countries, overcontrolled archetypes have a higher weight than in the more outgoing and adventurous countries in the West.
When it comes to the undercontrolled dimension, I would have expected Italians to score highly but it turns out that Europeans, in general, score highly on that dimension with Germans being particularly undercontrolled. That may not sound like the German stereotype of being control freaks, but what undercontrolled means in this instance is a set of traits that include being rude and insensitive but also open to exploration, scientific and geographical investigation, and impulsive decisions to invade other countries. And that is very German (just kidding, obviously…).
Next, there are anxious introverts where there are hardly any differences between the countries shown above and undirected introverts. But if anything, Brits, Australians, and Japanese stand out as scoring higher on these two dimensions than other countries.
And finally, there is resilience, which is where the Asian countries on average score lower than Europeans and Americans. In my view, that simply reflects the stronger orientation towards family and their own culture that make it harder for outsiders to become friendly with citizens of these countries. Europeans and Americans simply are easier to get along with because we have created more open societies and we tend to be more outgoing. Does that mean that one is better than the other? No, of course not. But it explains a lot in terms of willingness to accept refugees and immigrants from other countries, for example.