Psychological Tariffs


Via The Economist comes an interesting paper on the effect of cross-cultural perceptions of trustworthiness on trade between countries. Cultural bias, the authors conclude, can be as potent a determinant of trade flows as formal protectionism.


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  1. Not surprising at all, really. Who thought that international enmity ceases in corporate boardrooms?

  2. “…but we don’t want the Irish!”

  3. “This effect is stronger for good that are more trust intensive and doubles or triples when trust is instrumented with its cultural determinants.”

    Isn’t there a typo (at least) in there somewhere?

    And another thing: Which comes first: formal protectionism or cultural bias?

  4. Let’s be fair. Everyone wants to minimize risk for any level of investment. Risk is minimized by doing business with places one understands. For most people, places that they understand will correlate highly with places that are close geographically, have similar cultures, etc.

    That does not make it “cultural bias.” Even the authors of the paper call this just ‘perceptions of culture.’ The difference is more than semantics; one term evokes xenophobia and the other acknowledges differences.

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