Twenty-first century insights into economic development: cultural roots of cognition

Allison Demeritt and Karla Hoff

New Zealand Economic Papers, 2025, vol. 59, issue 1, 3-10

Abstract: Advances at the forefront of economics are reshaping our understanding of economic development and the policy levers that promote it. The behavioral economics paradigm that emerged in the late twentieth century was a first major turning point away from Homo economicus, as scholars acknowledged bounds on human attention and biases in judgment. But that wave of research missed the fact that many biases and heuristics have cultural roots: the concepts with which we divide up the world, the stereotypes that simplify our judgments, and other cultural mental models affect how we see the world and what we want. Culture is an independent causal influence on economic growth through its effects on generalized trust, cooperation, corruption, prejudice, identity, aspirations, and beliefs about how the world works. A twenty-first century wave of quantitative research in economics includes cultural mental models and broadens the set of tools for promoting development.

Date: 2025
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DOI: 10.1080/00779954.2024.2386998

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