Does Democracy Make Us Richer and Better Educated? Or Is It the Other Way Around?

It’s one of the ultimate chicken or egg questions: Does democracy lead to increases in education and income, or do education and higher income lead to democracy? It’s a tricky one, considering that over the last 200 years, they’ve essentially moved in tandem across much of the developed world. Seen here in the chart below:

So which is affecting which? A new working paper (full version here) by Fabrice Murtin and Romain Wacziarg attempts to untangle the two to understand whether democracy grows from education and higher income, or vice versa. Their essential question is: “Does education help raise the quality of institutions as well as productivity, or is an efficient institutional framework a prerequisite for expanding education levels and economic growth?”

Using a data set going back to 1870, with statistics from 70 countries, they conclude that education (particularly increases in primary schooling) and, to a lesser extent, per capita income levels, are strong determinants of the quality of political institutions – not the other way around. So education and income first, democracy second.

From the abstract:

Over the last two centuries, many countries experienced regime transitions toward democracy. We document this democratic transition over a long time horizon. We use historical time series of income, education and democracy levels from 1870 to 2000 to explore the economic factors associated with rising levels of democracy. We find that primary schooling, and to a weaker extent per capita income levels, are strong determinants of the quality of political institutions. We find little evidence of causality running the other way, from democracy to income or education.

Their findings re-affirm what Joseph Schumpeter declared in his 1942 book, Capitalism, Socialism and Democracy: “Modern  democracy is a product of the capitalist process.” And which political sociologist Seymour Lipset, popularized as the theory of modernization: “[T]he more well-to-do a nation, the greater the chances that it will sustain democracy.”

The authors argue that primary schooling has been a “major trigger” of the democratic transition over 1870-2000, more so than GDP growth. Without getting bogged down in the specifics of their regression analysis, or their use of “modern dynamic panel estimation methods,” I’ll simply post two of graphs that illustrate their point that education is a stronger determinant for democracy than economic growth:

 

(MISAM SALEH/AFP/Getty Images)

So, now that Egypt is less than a month away from its first elections, is there evidence of these findings in the recent events there? It would seem so, considering the advances Egypt has made in education over the last few decades. In 1980, the youth literacy rate (ages 15-24) in Egypt was 52 percent. By 2008, (according to UNICEF) 88 percent of males aged 15 to 24 were literate, while their female counterparts were 82 percent literate. Egypt’s economic development paints a muddier picture. Despite decent economic growth, poverty rates remained stubbornly high as GDP per capita growth lagged behind its regional neighbors.

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  1. Basil James says:

    Hi!

    I have another chicken and egg question on which I would like some information. Do television viewers watch a particular news channel because they agree with its views and are seeing what they want to see (an example could be conservative people exclusively patronising Fox News Channel) or do news channels form opinions and engender political leanings in a person? I am a college student and I was arguing this point with my professor in class. I was of the opinion that people watch a channel they agree with but my professor was least impressed. Could someone please direct me to some statistics regarding this or any studies that have been conducted?

    Thanks!

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  2. Eric M. Jones. says:

    Hidden due to low comment rating. Click here to see.

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  3. statspotting says:

    Is this not round trip fallacy? We need more instances before we can conclude either way, what causes what.

    http://statspotting.com/category/round-trip-fallacy/

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  4. Jacob S. says:

    I think this question is badly framed due to a lack of understanding of economics… wealth is created by producing the wants/needs of consumers; which increases the overall attempts by all persons to meet their needs/wants (relative wealth). All circumstances being equal, there is no reason to suppose that , democracy, monarchy, aristocracy or any other political organization would have an effect on the economic production unless we assume that some political organizations are more apt to be economically disruptive. The over-arching political organization is almost irrelevant to production, unless the by-products of that political organization result in ‘regulation’ or control of forces (means) of production, creating inefficiencies in the ability of the market to meet the needs/wants of consumers, decreasing overall wealth.

    The kind of guy your neighbor is, is unlikely to affect your own wealth/production, unless he’s a total jerk and his behavior makes a mess of your property, or perhaps his property is such a wreak that it brings down your overall property value (…or aghast!, he’s some kind of sociopath and attacks you!) . Political organization is much the same thing; it is only economically relevant to the extent that it interferes or attempts to control the market, which is always and necessarily result in decreases in production and therefore a decrease in the market’s ability to meet the needs/wants of people (consumers). At the end of the day, we are all trying to improve our conditions, and make a better future for ourselves, to that extent meeting the needs of consumers is not just ‘good’ economically, it is fundamentally a matter of ethics and treating people with respect and dignity (human rights of life, liberty and property).

    Education is a service/commodity like any other, and on a free-market, forces of competition and comparative advantages would result in the best quality education for the least cost. Education today, is so enmeshed in the political organization, that we create the very lowest quality educational product (one that doesn’t service the interests/needs of the students/consumers) for the highest possible price (I think the average in my area is $14,000 per average student, with $40,000 for special education).

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