People become more selfish during good times

In the second part of my little series on philosophical economics, I mentioned that more individualistic societies also have higher economic growth and are wealthier. The studies I know on the topic all show correlation, but not causation and it seems unclear if any causation (if it exists) goes from individualism to wealth or from wealth to individualism. However, over shorter time frames there is some indication that rising prosperity increases individualism, not the other way round.

Emily Bianchi studied different indicators that are linked with individualistic behaviour to see if individualism fluctuates over the business cycle. Going back to the end of the Second World War, she looked at the following indicators:

• Do Americans give their children more uncommon names that stand out from the masses?

• Do parents encourage more individualistic behaviour in their children or emphasise the need to be more social and get along with others?

• Do people aspire to look different from others?

• Are song lyrics of hit songs more self-oriented or other-oriented?

• Do people feel more uncertain during economic downturns and does that create a greater need for community?

Ok, when I read that she used the first names of newborns to measure individualism I had to laugh. But while I can’t take that analysis on its own as a serious indicator it confirms the results of the other studies. In case you were wondering, parents are indeed more likely to give their babies unusual names during economic expansions and more likely to give them more common names in recessions and economic downturns.

To me, the most relevant studies are the one that looks at what kind of behaviour parents emphasise with their children and whether people want to look different from others because that, in my mind, is a direct expression of individualism.

Below is a chart of the correlation between the unemployment rate in the US and the importance parents give certain behaviours to their children (on a scale from 1 to 5). As you can see, in economic boom times when the unemployment rate is low, “thinking for oneself” is emphasised more and “helping others” is considered less important.

Parental emphasis in the education of children

Source: Bianchi (2016)

Today, the US unemployment rate is around 4% and we once again live in a world where people are harking on about ‘doing their own research’ (which usually is a euphemism for seeking out information that confirms their pre-existing beliefs and dismissing evidence to the contrary). Similarly, solidarity with others, in particular people in other countries, has declined in recent years.

If you look directly at the expressed desire to ‘look different’ and stand out from the crowd, a survey of more than 100,000 between 1975 and 2006 showed that for every one percentage point increase in the unemployment rate, the desire to look different declined by 0.04 points on a scale that ranged from 1 to 7. That is a small effect of 0.7% but it increases to about 1% if the high inflation years 1976 to 1980 are eliminated from the sample.

Again, I emphasise that this shows correlation rather than causation, but I have a hard time dismissing these results as devoid of any causation (direct or indirect). It seems intuitively right (which is admittedly a very different concept from being ‘actually right’) that in economically hard times, people don’t want to become a target for job reductions just by looking differently. And in hard times, people tend to help each other rather than turn on each other, as we can see after every natural disaster. We are social animals and we react to suffering with compassion, not with selfishness.