The changing face of culture: gauging the impactof a free media

Nabamita Dutta • Sanjukta Roy

Published online: 26 June 2011

� Springer Science+Business Media, LLC 2011

Abstract This paper empirically assesses the relationship between culture and a free

press. The results reveal that a privatized or ‘free media’ strongly influences informal

institutions of a country or what is commonly known as culture. By providing unbiased

and a wide variety information to the masses, the media sector not only reduces

information asymmetry and transaction costs but also helps generate higher levels of

social capital. It acts as an effective liaison between the masses and the government

and also among various religious, ethnic and other fractionalized groups in a society.

We use the proxy of informal institutions identified by Tabellini (Journal of the

European Economic Association 8(4):677–716, 2010) which consists of four traits.

The results are robust to alternate specifications and inclusion of controls.

Keywords Informal institutions � Culture � Media freedom � Institution

JEL Classification O10 � Z1 � FO1

1 Introduction

The way people think, the norms they abide by, the culture they tend to follow, the

attitudes they develop over time can be termed, in a nutshell, as informal

institutions. Informal institutions are socially sanctioned standards of behavior (like

attitudes, customs, taboos etc.) that are extensions and modifications of formal rules

outside official framework. These norms or traditions are deep rooted in any society

and are specific to countries. These informal characteristics are often synonymously

N. Dutta (&)

Department of Economics, University of Wisconsin-La Crosse, La Crosse, WI, USA

e-mail: dutta.naba@uwlax.edu

S. Roy

World Bank Institute, Internews Network, Washington, DC, USA

123

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DOI 10.1007/s10657-011-9261-8

termed as ‘‘culture’’ of a country. Given the exclusivity of culture of each country, it

is also a fact that informal institutions or culture undergoes a process of evolution as

societies change and develop over time. Particularly in the era of globalization,

exclusivity of any culture is under constant threat. In modern societies, where

constant economic interactions between countries are the key, the informal norms or

culture also gets molded1 and altered in the process. It is in this context that we

bring in the role of media.

Literature has unanimously agreed that an efficient media sector has the ability to

make citizens politically aware, distribute unbiased news and provide people with

ample informational choices (Leeson 2008a, Dutta et al. 2009). Media—in all its

form namely print, television, radio and internet play an indispensable role in

informing and shaping the mindset of an economy, be it at the local, national or the

international level. It is in fact an ‘‘institution’’ which, can have the broadest reach

and largest immediate effect on the population at large. By providing unbiased and a

wide variety information to the masses, the media sector not only reduces

information asymmetry and transaction costs but also helps generate higher levels of

social capital. It acts an effective liaison between the masses and the government

and also among different religious, ethnic and other fractionalized groups in a

society (Knowles and Weatherston 2006). In this paper we investigate the impact a

free media sector has on the informal institutions of a country. Here, at the outset we

should mention that we use the terms ‘‘culture’’ and ‘‘informal institutions’’

synonymously throughout the paper. Following Tabellini (Forthcoming), we

consider four proxies of informal institutions—TRUST, RESPECT, CONTROL

(considered positive form of informal institutions) and OBIDIENCE (considered to

be a negative form of informal institutions). Our main research question addresses

the fact that an unbiased media would impact the informal institutions (proxied by

the above) whereby affecting the greater institutional structure of a country.

Our results show that press freedom is indeed a determinant of informal

institutions of a country. We adopt both cross section and panel analysis to prove

our claim. While for the cross-section analysis, we use an index of press freedom

from Freedom House, for the fixed effect specifications, we consider press dummy

from the same source. This is because the data over an extensive sample period is

only available in qualitative form. So for the panel specifications which are

considered over an extended period, we consider dummies for press freedom. Our

results2 are robust to a vast range of controls and also to fixed effect specifications.

Further, cross-sectional specifications suggest the presence of non-linearity. With

1 This fallout is sometimes referred to as cultural erosion or sometimes as cultural gains from trade.

While the former blames globalization as robbing cultures off their indigenous traits and emphasizes the

negativities, the latter calls it more of a ‘‘creative destruction’’ saying that in the process indigenous

cultures evolve and emerge better.2 One main argument of the paper is that a free media provides a larger spectrum of information from

across the globe leading to creation of an informed citizenry. This is turn act as a catalyst for major

institutional change in a country. Our results find support in the arguments of Leeson (2008) (who shows

that lower media freedom is associated with poor political knowledge, low political participation as well

as low voter turnout), Coyne and Leeson (2004) (where they identify the fact that a free media allowing

diverse coverage of both domestic and foreign information, introduces new perspectives to consumers

and turns games of conflict into games of coordination), Coyne and Leeson (2009) (who identifies three

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greater press freedom, the improvement in informal institutions has a diminishing

return.

Our paper is structured in the following way. Section 2 presents the background

literature both on culture and press freedom in the context of economic development

of a country. Further, it builds the hypothesis and explains how a free press can

enhance the culture of a country. Section 3 explains the data used in the paper and

talks about the data sources. Section 4 presents the benchmark results of both panel

and cross-section specifications. Some robustness issues are discussed in Sect. 5.

Section 6 concludes.

2 Exploring the different channels of culture—how a free press influences eachchannel?

A good institutional framework has been proved to be essential for growth and

development of an economy in economic research. Good institutions3 harbor good

governance and accountability, promote trust, enforce contracts and reinforce

property rights, each of which is a necessity for development and growth.

Institutions are of two types. As defined and distinguished by North (1990), formal

institutions are the written rules and informal institutions are the unwritten codes of

conduct. The scope of this paper is limited to the impact a free press has on informal

institutions (often termed as culture) only.

Informal institutions, as mentioned above, are socially sanctioned standards of

behavior (like attitudes, customs, taboos etc.) that are extensions and modifications

of formal rules outside official framework. These norms or traditions are deep

rooted in any society and are specific to countries. These informal characteristics are

often synonymously termed as ‘‘culture’’ of a country. Maintenance and contin-

uation of these exclusive cultural traits depend on self-enforcement methods of

obligation, internal norm adherence or fear of gossip, shaming or boycott. Now the

culture of a society has important bearings on its economic performance through its

extent of influence on the market. As observed by Knack and Keefer (1997),

Woolcock (1998), Francois and Zabojnik (2005) and Chan (2007), social capital and

trust has important economic implications. They confirm that the creation, nature

and progress of social networks and trust are dependent on a society’s existing

cultural framework. Further, reasearchers who authenticate the importance of

institutions (North 1961, 1990, 2005; Davis and North 1971a, b; Keefer and Knack

1997; Dawson 1998; Acemoglu et al. 2001, 2002; Licht et al. 2007; Rodrik et al.

Footnote 2 continued

ways in which a privatized media can bring about institutional change—gradual effect, punctuation effect

and reinforcement effect).3 As defined by North (1991), institutions are the ‘‘rules of the game’’ or ‘‘humanly devised constraints

that shape human interaction’’. Institutions are created by humans as an attempt to control the uncertain

environment and to lower transaction cost. Younas (2009) shows that efficient institutions especially

pertaining to the legal system reduce investment risk, ensures democratic accountability and, thus, raises

capital mobility in developing nations. Leeson (2005) has explained in his paper that poor institutions

transform into lower economic progress in the presence of high level of ethnic fractionalization.

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2004; Acemoglu and Johnson 2005; Meon and Sekkat 2008) also points to the

importance of culture. As North (2005) points out, culture moulds the perceptions of

people about problems and prospects whereby determining the course of action

taken up by individuals and hence determines the performance the economy at

large.

Economic interdependence through trade and globalization is seen at its highest

extent over the past few decades. Under such exchanges, the cultural exchange

between countries are increasing too. Old values and beliefs are getting shared and

many a times getting revamped so as to suit the modern world. People are getting to

know cultures of different countries and in the process are adopting some of them.

It is worth noting in this context, as stated by Jutting et al. (2007), changing informal

institutions is a tedious process. It involves changing power relations and

overcoming path dependencies. Media, in this context, also plays a huge role

because it influences the mindset of the people through the channels of print,

broadcast and internet. Following the developed world, there is huge privatization in

the media sector in the developing countries which, in turn, is affecting their

informal institutional set up. People are learning to adopt new cuisines, lifestyles,

fashion trends and are getting remolded everyday.

By itself, the media sector has been proven to be more beneficial for the economy

if it is free from government stronghold. Infact, we define a free media as one with

minimal government interference and ample scope for private participation.

Previous research has proved that countries with state controlled media suffer

from poverty, high infant mortality rates, higher corruption and less developed

capital markets (Djankov et al. 2003). Further, for a state controlled media,

politicians get an additional edge in manipulating information reaching the public

and serving their private interests at the expense of the society (Stiglitz 2002; Coyne

and Leeson 2005). Besley and Burgess (2002) consider the case of India, a well

established federal democracy with a relatively free media, to establish how a free

press can affect the political economy of responsiveness. Anam (2002) mentions

that with the advent of privatization of electronic media in Bangladesh, the media

houses have ceased to be mere extensions of the ‘government’s propaganda

mechanism’ and are thinking freely. Sobel et al. (2009a) shows that a free media

apart from being useful for the domestic economy, also spills over to the neighbors

whereby spilling its benefits too. Sobel et al. (2009b) also find that a free media

encourages entrepreneurial initiatives. A free media provides people with unbiased

information and ample informational choices which showcase life, beliefs and

cultures across the globe. The access to these lives and processes beyond one’s

geographic territories is bound to have deep impacts on the lives, mindset and

expressions of people. Leeson and Coyne (2007) explains how transitioning

economies looking at reforms, find their journey difficult in the absence of a free

media. The paper establishes that effectiveness of policies (like foreign aid) is

dependent on a critical level of an active and independent media sector.

Now when due to globalization the major channel of information dissemination

in a country, namely, media starts getting privatized, the same people of the country

gets to see practices of cultures other than theirs. They see how given a same

situation, people of other countries act and react differently and how that alters

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consequences. Gradually people start adapting themselves to foreign ways of life

that they find appealing or restructures their indigenous ways of life and thinking so

as to suit a more modern atmosphere. Thus, a free media plays a very important role

in modifying the sticky informal norms of a country. Our hypothesis finds support in

the theory postulated by Leeson (2009). He argues that socially heterogonous

groups or agents can reap the benefit of trade by reducing the social distance through

viable signals. In our case, in a similar way, a free media facilitates exchange of

signals between heterogeneous and socially distant groups whereby helping them to

reduce the distance and engage in economically viable interactions. Our claim is

also supported by Leeson (2007, 2008b) where self governance has been shown to

be capable of enhancing interaction between diverse social groups.

We start with TRUST which is an important trait defining informal institutions or

culture. We hypothesize that greater media freedom boosts TRUST or social capital.

By providing unbiased and a variety of information, a free media not only reduces

cost of acquiring information in a society, but also helps generate higher levels of

social capital. It acts as an effective liaison between the masses and the government

and also among various religious, ethnic and other fractionalized groups in a

society. A free media thus aids in effective public policy implementation and

helps overcome information bias, rendering the government more accountable.

The enhanced social interactions increase TRUST4 in the society, which in turn,

enhances culture.

The aspect of RESPECT is linked strongly with that of TRUST. When the level

of TRUST goes up in a society, RESPECT should go up as well. Free media

generates more social capital—breaks down artificial barriers to human interaction

(like class differences). As a society becomes more free and interaction increases,

respect now becomes a function of an individual’s behavior and social performance

than her class status in the society.

The extent of self-determination possessed by individuals decides the level of

CONTROL present in a society. CONTROL will determine whether individuals

have self control over their choices vis-a-vis their reliance on fate.5 As said before, a

free media reduces information asymmetry and gives more access to global best

practices to people. Accordingly, a person less uncertain about the consequences of

her choices would be more confident in venturing out and engaging in informed

decision making in all spheres of life—economic, political or social. In short, an

informed individual is more likely to have CONTROL over her life and have less

reliance on fate’s uncertainty.

As Tabellini (2008, 2010) argues, many societies view individualism to be

destructive. Thus, parents discourage their children against individualistic behavior

and, thus, also discourage development of will power in their children. Thus, they train

their children so as to be obedient and never disagree with elders’ beliefs. The result is

4 Putnam (2000) has pointed to a different perspective. According to Putnam, media has changed leisure

from being a ‘‘collective experience’’ characteristic to being more privatized and reclusive. Since

collective leisure leads to a culture of public interaction and generation of trust, the erosion of such

behavior might have some implication for social capital.5 Banfield (1958) puts forward that the overall development of a society will depend on people’s

perceived ‘locus of control’ over economic activity.

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that children develop reduced risk taking attitudes while dealing with social

relationships, innovation and entrepreneurships. This, in turn, hampers economic

development. Thus, greater OBEDIENCE is bad for economic development. A free

media changes how people think about their life. The influence of news from all over

the world, getting to know the different independent lifestyles of people from different

countries, getting used to different norms and cultures make individuals re-think about

the traditional ways. They become more independent, are more focused about their

life, want to venture out in the world and engage in more risk taking behaviors in their

personal and professional life. For example, people change jobs more now than they

used to do before or even shift their career focus more often now or easily choose

unconventional professions (like hotel management, call-center executives or other

newly emerging vocational career options) more confidently. Thus, all these suggest

that greater media freedom actually leads to lower OBIDIENCE and thus, will

improve informal institutions.

3 Data

The variable we use to measure informal institutions, our dependent variable—

alternately known as culture, has been first identified by Tabellini (2010) and

Williamson and Kerekes (2009) has expanded the variable later. Tabellini has

identified some important traits in an attempt to capture multiple aspects of informal

institutions like norms, convention, grass-root institutions and trust.6 The four traits

identified are TRUST, CONTROL, RESPECT and OBEDIENCE. These cultural

traits are measured by utilizing survey data from the European Values Survey (EVS)

and World Values Survey (WVS). These surveys capture culture in the form of

individual beliefs and values reflecting local norms and customs (The EVS

Foundation and the WVS Association 2006). Following Tabellini (2008), Coyne

and Williamson (2009) have constructed an aggregate index measure of informal

institutions or culture. It is constructed by summing Trust, Control, and Respect and

subtracting the Obedience score. In order to expand their data set, Coyne and

Williamson (2009) have considered all four waves spanning over 1981–2004. We

have done the same in our paper and have utilized their data for our specifications.

TRUST, the first cultural attribute, aims to capture the level of trust among

individuals. The following question from the survey is used to measure this

attribute: ‘‘Generally speaking, would you say that most people can be trusted or

that you can’t be too careful in dealing with people?’’ The percentage of

respondents that answered ‘‘Most people can be trusted,’’ has been used to capture

the level or degree of trust in each country. The second component, CONTROL,

6 Knowles and Weatherston (2006) argues that in a high-trust environment, common pool resources can

be managed more efficiently because the norms is such cases should be more successful. Thus, TRUST

can definitely be one of the proxies of informal institutions. Also, individuals need to have some degree of

self-determination so as to deal with issues, for example, credit schemes. If they leave everything to fate,

then efficient informal institutions are less likely to be formulated. Literature has argued that while

TRUST, RESPECT and CONTROL are important for social interaction and encourage production and

entrepreneurial initiatives, OBEDIENCE negatively affects economic development.

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measures the extent to which individuals possess freewill. The question used to

capture this trait is: ‘‘Some people feel they have completely free choice and control

over their lives, while other people feel that what we do has no real effect on what

happens to them. Please use this scale (from 1 to 10) where 1 means ‘none at all’

and 10 means ‘a great deal’ to indicate how much freedom of choice and control in

life you have over the way your life turns out’’. By averaging all the individual

responses and multiplying them by 10, an aggregate control component is

determined.

RESPECT is the third cultural trait which is based on the distinction between

generalized7 versus limited mortality. The following question is used to decide the

importance of respect in a society: ‘‘Here is a list of qualities that children can be

encouraged to learn at home. Which, if any, do you consider to be especially

important? Please choose up to five’’. Respect is defined as the percentage of

respondents in each country that mentioned the quality ‘‘tolerance and respect for

other people,’’ as being important. OBEDIENCE is the fourth and final trait and the

question measuring respect is also utilized in capturing the level of obedience in a

society. It is measured as the percentage of respondents within a country answering

that obedience is an important quality for children to learn.

Our independent variable of interest is media freedom. Media freedom data is

taken from the Freedom House Database (2009). Freedom House’s survey data,

spanning over a large time frame, is the most comprehensive dataset available on

global media freedom. It is based on an annual survey of ‘media independence in

195 countries and territories’. The index aims to capture the extent print, broadcast

and internet freedom present in every country of the world. The level of press

freedom in each country is based on twenty-three methodology questions divided

into three categories: the legal environment, the economic environment and the

political environment. The legal environment category judges laws and criterions

that could influence media contents, the ability of journalists’ to operate freely and

the government’s use of regulations to curb media operations. The degree of

political control over the content of news media forms the basis for the political

environment. The economic environment includes the structure of media ownership,

transparency and concentration of ownership and the impact of corruption and

economic institutions on media. The index provides numerical ratings and assigns

values between 0 and 100 points. The Freedom House index has assigned higher

points to lower levels of press freedom. For the convenience of analysis, the scores

have been rescaled so that higher scores denote freer environment. The numerical

ratings are available from 1994 onwards.

Our study identifies many control variables as important determinants of informal

institutions. We control for regional dummies based on World Bank classification—

Sub-Saharan Africa (SSA), Latin America and the Caribbean, Middle East and

North Africa (MENA), Europe and Central Asia (EAC), East Asia and the Pacific

(EAP) and South Asia (SA). Norms and culture differ to a great extent based on

7 Generalized mortality is consisted of a set of rules which govern interactions across social groups that

in turn lead to less opportunistic behavior outside of an individual’s primary social group. The idea of

limited mortality implies the absence of general rules and the presence of ‘in-group’ rules (Plattea 2000).

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regional characteristics and, thus, they should play an important role in the

evolvement of a country’s informal institution. Controlling for latitude can also be

based on similar reasoning and, thus, we have used regional dummies and latitude

interchangeably.

We have also used the proportion of individuals following different religions as

another set of controls. Belonging to different religions will have different

implications in terms of norms and culture. Thus, we control for percentage of

individuals who are Catholics, Muslims, Protestants and other religions8 in a

country. Further, we have used an index of ethno-linguistic fractionalization (ELF)

from La Porta et al. (1999) as a determinant of culture. As stated in the literature, the

index measures the probability that two individuals selected randomly from a

population belong to two different ethnic groups. The higher the number, the greater

is the diversity in a country. It is reasonable to assume that the informal

infrastructure of the country having less ethnic groups will be very much different

from that of a country with more ethnic groups.

Following Coyne and Williamson (2009) and other literature, we have controlled

for population and land area which proxy for the size of a country. Further, trade

openness has been shown to be an important determinant and, thus, we add the

variable as control too. We also control for Gross Domestic Product (GDP) in

constant 2000 U.S. dollars which capture the level of development of a country. We

have also controlled for growth of income (growth of GDP). Glaeser et al. (2004)

has shown that income growth affects institutions. Along with these, we also control

for population. Finally, we control for a measure of formal institutions. For this we

consider legal origin dummies from La Porta et al. (2004) database. We also include

various proxies of formal institutions from Polity IV database (2009) as part of

robustness analysis. For our benchmark regressions, we adopt cross section

specifications. We consider a sample of 76 countries over a period of 16 years. The

press freedom score is available in quantitative data from 1994. We consider panel

specifications later by considering dummies of press freedom9 over the period

1989–2005. While Appendix 1 provides the list of countries in the paper, Appendix

2 and 3 provide the correlation matrix and data sources, respectively.

4 Model and benchmark results

4.1 Cross sectional specifications

As mentioned before, for our benchmark specifications, we consider cross sectional

specifications. Cross sectional specifications consider long term changes and, thus,

we consider Platteait as our starting model. Informal institutions or culture take

some time to change and many variables which affect culture are also time-

invariant. Cross sectional specifications also allow us to include time invariant

variables which are important determinants of culture. Though we consider fixed

8 We always need to drop one of the four variables as they all add up to a 100%.9 Freedom House maintains qualitative data on press freedom of countries from 1989 onwards.

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effect specifications later, we stress on our cross sectional results throughout the

paper.

One other point is worth mentioning here. We are aware that there can be

potential chances of endogeneity in the specifications. Just as press freedom might

have an impact on culture of a country, the culture of the same should also impact

press freedom. This will be result in biased and inconsistent estimates. One obvious

method to eliminate this bias is to run Instrumental Variable (IV) regressions. Yet,

such regression methodology requires finding efficient instruments. We face a

tremendous challenge here since it will be almost impossible to find a variable

which is correlated with media freedom but not correlated with the dependent

variable. Thus, we remain cautious throughout our empirical analysis. We refrain

throughout the paper from making any inferences about causal relationships

between the variables. Our empirical analysis does not indicate any causal inference

but only implies the presence of statistical correlation between the variables.

Our cross sectional regression specification is as follows

Culturei ¼ b0 þ b1PressFreedomi þ b2Xi þ b3Ri þ di ð1Þ

where the dependent variable Culturei is the aggregate index for country i. Our

independent variable of interest is Press Freedomi which is the average press

freedom score over the period 1994 to 2005. Xi is the matrix of control variables and

Ri is the vector of regional dummies. Table 1 presents the benchmark results.

In Table 1, we control for time invariant control variables which are the regional

dummies (SSA, EAP, EAC, LAC, MENA and SA), the proportions of individuals

who are Catholic, Muslim, Protestants or follow other religions, Land area, Ethno-

linguistic fractionalization index and latitude.

The coefficient of press freedom is positive and significant for all the alternate

specifications. For our first benchmark specification in column 1 of Table 1, we only

include press freedom. Then we include regional dummies, religion affiliations, land

area, ethno-linguistic fractionalization (ELF) index and latitude, one at a time, in

columns (2), (3), (4) and (5), respectively. Coefficients of all regional dummy

variables are negative and significant for most of the specifications. The negative

coefficients of the dummies imply that in general the developing nations, which

have low per capita income and, in general, suffer from poor development

infrastructure also have poorly developed informal institutions. The religion affiliate

variables are also significant—Protestants have positive impact on informal

institutional set up of a country while Muslims and Catholics have a negative

impact. Greater ethnic diversity affects informal intuitions negatively. With higher

ethnic diversity, individuals tend to remain restricted to their own clans and develop

a feeling of distrust for other people outside their clans. Latitude is significant in the

last specification.

We do not aim to provide a rigorous interpretation of the coefficients as both

press freedom and culture are indices. We are mainly focusing on the sign and

significance of the variables. But a simplistic interpretation is provided for clarity of

understanding. As shown in column (1) of Table 1, a unit rise in press freedom over

a scale of 0 to 100 will change culture by 0.05 units. Thus, a 20 unit rise in the index

of media freedom raises the cultural index by 1 unit. Freedom House assigns the

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degree of press freedom of a, country the following status—Not Free (NF) status if

the score is between 61 and 100, Party Free (PF) if the score is between 31 and 60

and Free (F) status if the score is between 0 and 30. Since we rescale the data for our

analysis, the new classifications should be as follows—Not Free (NF) status if the

score is between 0 and 40, Party Free (PF) if the score is between 41 and 70 and

Free (F) status if the score is between 70 and 100. Thus, a rise in press freedom

score within 30 to 40 units can make a country go from ‘not free (NF)’ to partly free

Table 1 Cross sectional specifications: the impact of press freedom on culture (dependent variable:

aggregate index of culture)

Independent variables (1) (2) (3) (4) (5) (6)

Press freedom 0.0537*** 0.0302*** 0.0179 0.0193* 0.0226** 0.0232*

(0.00970) (0.00952) (0.0110) (0.0104) (0.0107) (0.0138)

SSA -3.151*** -3.567*** -3.627*** -2.969***

(0.664) (0.491) (0.489) (0.660)

EAP -0.251 -0.378 -0.533 -0.414

(0.762) (0.749) (0.750) (0.758)

ECA -1.413*** -1.361*** -1.475*** -1.759***

(0.418) (0.500) (0.519) (0.442)

LAC -1.927*** -1.116** -1.117** -1.015**

(0.466) (0.457) (0.467) (0.470)

MENA -1.882** -1.870** -1.962** -2.138***

(0.815) (0.780) (0.793) (0.524)

SA -1.969** -1.897* -2.034* -2.518***

(0.943) (0.996) (1.043) (0.637)

Protestant 0.0249*** 0.0221** 0.0205** 0.0187**

(0.00830) (0.00857) (0.00917) (0.00753)

Catholic -0.0108 -0.0133* -0.0175** -0.0122**

(0.00657) (0.00692) (0.00761) (0.00477)

Muslim -0.00517 -0.00602 -0.00969 -0.0158**

(0.00521) (0.00521) (0.00613) (0.00598)

Land area 0.03 0.05 0.09

(0.04) (0.08) (0.08)

Fractionalization -1.068* -2.307***

(0.606) (0.519)

Latitude 2.810**

(1.232)

Intercept 1.076* 3.569*** 4.397*** 4.493*** 4.668*** 2.838***

(0.625) (0.798) (0.944) (0.916) (1.129) (0.799)

Observations 75 75 73 71 54 53

R-squared 0.381 0.565 0.718 0.730 0.834 0.763

Robust standard errors in parentheses

*** p \ 0.01, ** p \ 0.05, * p \ 0.1

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or from party free (PF) to free status (F). Thus, a switch from NF to PF or PF to F

(DMedia Freedom C 40) can raise culture score by 2 units. When we control for

other variables, a similar increase in press freedom score will raise culture score by

approximately 1 unit. In terms of standard deviation, for a one S.D. rise in press

freedom for column (1) in Table 1, the corresponding rise in culture score is by 1.07

units. The matching rise for column (6) specification in Table 1 is by 0.43 units.

In Table 2, we check the robustness of our findings by including more controls

which vary over time. They are gross domestic product (GDP) growth, trade

openness, population and GDP in constant 2000 dollars. Our variable of interest,

press freedom, retains its significance. While the controls included in Table 1 are

mostly significant and retain their expected signs, the newly included explanatory

variables are not significant. In terms of magnitude, as shown in column (4), a 20 unit

rise in the index of media freedom raises the cultural index by 0.6 unit (Table 3).

Formal institutions can enhance a country’s culture. As North (1990) claims that

as informal institutions of a country are formalized, the formal institutional set up

contributes positive to the enhancement of norms and culture. We include legal

origin dummies10 for English Common Law and French Civil Law. The results

remain robust to inclusion of these proxies. We check our results with alternate

proxies of formal institutions. We control for the extent of democracy or autocracy

in a country. We include polity2 from Polity IV dataset which is an index ranging

from -10 to 10 and has been constructed by subtracting the autocracy score from

the democracy11 score.

We consider an average of polity2 over the period 1994–2005. Further, we also

consider democracy variable from the same database. For both polity2 and

democracy the results are robust. Polity2 and democracy themselves are insignif-

icant.12 Further, we consider the POLCOMP13 variable from Polity IV database

which combines the regulation and competitiveness of participation scores. The

results remain unaffected. We also control for some other variables from Polity IV

which represent checks and balances on executive power in a country. The variables

10 Several papers have shown these are important factors for growth and development factors of a nation

(Glaeser et al. 2004).11 Autocracy and democracy are separate indexes in the Polity IV database each of which ranges from 0

to 10 with higher values indicating stronger democratic or autocratic institutions. Polity2 is more efficient

to use compared to the autocracy/democracy indexes since it has been corrected for ‘standardized

authority scores’ representing periods of transition or interregnum or foreign interruption.12 On a closer inspection, we have an interesting analysis. We incorporated an interaction term in our

specification. The coefficient of the interaction term of formal institution and press freedom is positive

(a2) and significant while the coefficient of formal institution is negative (a1). To get a better sense of the

impact of formal institution on culture, we consider the partial derivative of culture with respect to

formal. The partial derivative is as follows dCultureit

dFormalit¼ a1 þ a2Press Freedomit . Thus, for lower values of

press freedom, formal will have a negative impact on Culture. For higher values of press freedom, the

impact will be positive. When we don’t consider the interaction term, the sign of the coefficient of formal

can either be negative or positive, depending on whether the distribution is negatively or positively

skewed. The results with the interaction term are not reported in the paper since it is not our benchmark

specification and would take away from our primary focus. However, we have checked the results and this

by itself can be followed up in a separate research.13 POLCOMP, XRREG and XCONST are some, among others, component variables which have been

used in the construction of democracy and autocracy index.

Eur J Law Econ (2013) 36:95–115 105

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Table 2 Cross sectional specifications: the impact of press freedom on culture (dependent variable:

aggregate index of culture)

Independent variables (1) (2) (3) (4)

Press freedom 0.0214** 0.0236** 0.0257** 0.0257

(0.0101) (0.00886) (0.0103) (0.0157)

SSA -2.973*** -2.935*** -2.902***

(0.647) (0.657) (0.703)

EAP -0.366 -0.341 -0.254

(0.771) (0.807) (0.872)

ECA -1.749*** -1.750*** -1.763***

(0.448) (0.466) (0.483)

LAC -1.056** -1.042* -1.111**

(0.465) (0.515) (0.547)

MENA -2.143*** -2.177*** -2.171***

(0.522) (0.544) (0.564)

SA -2.455*** -3.070*** -3.105***

(0.660) (0.980) (1.004)

Protestant 0.0207** 0.0216** 0.0211** 0.0212***

(0.00913) (0.00928) (0.00960) (0.00761)

Catholic -0.0172** -0.0159* -0.0160* -0.00941

(0.00786) (0.00820) (0.00843) (0.00597)

Muslim -0.00965 -0.00693 -0.00670 -0.0119*

(0.00621) (0.00679) (0.00702) (0.00652)

Land area 0.05 0.001 0.02 0.06

(0.08) (0.09) (0.09) (0.10)

Fractionalization -1.104* -1.110* -1.189* -2.380***

(0.617) (0.624) (0.691) (0.542)

GDP growth -0.0350 -0.0646 -0.0776 -0.0516

(0.0688) (0.0651) (0.0710) (0.105)

Trade -0.000250 -0.00123 0.00251

(0.00460) (0.00503) (0.00546)

Population 0.001 0.001 0.001

(0.001) (0.001) (0.001)

GDP -0.09 0.03

(0.10) (0.12)

Latitude 2.767*

(1.399)

Intercept 4.848*** 4.705*** 4.728*** 2.407**

(1.054) (1.126) (1.170) (0.963)

Observations 54 53 53 52

R-squared 0.834 0.845 0.847 0.772

Robust standard errors in parentheses

*** p \ 0.01, ** p \ 0.05, * p \ 0.1

106 Eur J Law Econ (2013) 36:95–115

123

Table 3 Cross sectional

specifications: the impact of

press freedom on culture

(dependent variable: aggregate

index of culture)

Robust standard errors in

parentheses

The year dummies have not

been reported

*** p \ 0.01, ** p \ 0.05,

* p \ 0.1

Independent variables (1) (2)

Press freedom 0.0202** 0.0192*

(0.00922) (0.00992)

SSA -3.625*** -4.288***

(0.964) (1.309)

EAP -1.142* -0.663

(0.615) (0.707)

ECA -2.880*** -2.645***

(0.482) (0.451)

LAC -0.749* -0.673

(0.439) (0.464)

MENA -2.458*** -2.290***

(0.535) (0.498)

SA -3.488*** -4.780***

(0.816) (1.497)

Protestant 0.00941 0.0137*

(0.00802) (0.00783)

Catholic -0.0143** -0.0107*

(0.00562) (0.00602)

Muslim -0.00320 0.00118

(0.00522) (0.00496)

Land area 4.67e-08 -2.93e-08

(8.37e-08) (1.27e-07)

Fractionalization -0.224 -0.446

(0.630) (0.671)

GDP growth -0.179**

(0.0685)

Trade -0.000520

(0.00422)

Population 1.98e-09**

(9.56e-10)

GDP -0.13

(0.08)

Legal origin (UK) -0.992 -0.0683

(0.648) (1.020)

Legal origin (France) -1.687*** -1.686***

(0.522) (0.497)

Intercept 5.833*** 6.121***

(1.000) (1.173)

Observations 54 53

R-squared 0.868 0.888

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considered are XCONST which refers to the ‘extent of institutional constraints on

the decision- making powers of the chief executive’ and PARCOMP which implies

the degree of competitiveness present in the political arena. The results remain

robust to the inclusion of all these variables.

4.2 Panel specifications—fixed effect model

Panel specification is considered over the period 1989–2005. Prior to 1989, though

we have qualitative data on press freedom, it is provided in the Freedom House

website separately for two categories—print and broadcast. The aggregate status is

not mentioned over the period 1984–1988. Thus, we consider data 1989 onwards.

We consider a press dummy over the period 1989–2005. The press freedom variable

takes three values—a country in a particular year gets a value 0 if it has the Not Free

status, 1 if it has the Partly Free status and 2 if it has the Free status.

Our panel regression specification is as follows

Cultureit ¼ a0 þ a1Press Dummyit þ a2Xit þ a3Tt þ eit ð2Þ

Our independent variable of interest is Press Dummyit, which is the dummy over the

period 1989 to 2005. Xi is the matrix of control variables and Tt is the vector for year

dummies. Table 4 presents the results with fixed14 effect specifications. We

consider country fixed15 effects.

The controls added in column (1) are GDP per capita, GDP growth, trade and

telephone mainlines. Infrastructure should affect informal institutions or culture.

Press dummy is positive and significant. In subsequent columns we add more

controls. The controls added are population, urban population, polity 2 and a

measure of economic freedom16 from Fraser Institute. For all the alternate

specifications, press dummy is positive and significant. In alternate specifications,

we have re-run all the specifications (results not reported) by including GDP

adjusted for purchasing power parity (PPP) instead of GDP per capita and our

results remain robust.

The interpretation of our results for panel specifications is not that straightfor-

ward since press freedom is a dummy variable. As press of a country gains a ‘partly

free’ status from a not free status, the culture score rises by 0.1 units. When the

status becomes ‘free’, the corresponding rise in culture score is 0.2 units. These

figures are for column (1) specification. The corresponding figures for column (6)

specifications are 0.2 units and 0.4 units. The magnitude of change is much higher

for cross sectional specifications since they consider long term changes.

14 We run panel specifications with country fixed effects.15 The p value generated by running Hausman test confirms that the appropriate model to use is fixed

effect.16 As stated above, the interaction term for press freedom and formal (polity or economic freedom) is

positive and significant here too while the coefficient of formal institution itself is negative.

108 Eur J Law Econ (2013) 36:95–115

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5 Robustness

We perform a series of robustness tests to confirm the strength of our findings. Many

of the controls like GDP growth, GDP, population may be determinants of press

freedom as well. Thus, there are potential chances of multicollinearity in the

specifications. The main concern with multicollinearity is that when the degree of

multicollinearity increases, the standard errors can get wildly inflated. So we check

for the degree of multicollinearity in our specifications. Our results show that the

Variance Inflation factor (VIF) is less than 1017 for all the coefficients. Thus, even

though some degree of correlation may be present among the control variables, it is

not to that extent such that it demands further investigation. We check this for the

specifications with legal origins as well for the ones where institution proxies from

Polity IV database are included.

Table 4 Fixed-effect specifications: the impact of press freedom on culture (dependent variable:

aggregate index of culture)

Variables (1) (2) (3) (4) (5)

Press freedom dummy 0.109* 0.0883 0.111* 0.152** 0.177***

(0.0617) (0.0625) (0.0616) (0.0631) (0.0676)

GDP growth -0.00890** -0.00891** -0.00991** -0.0147*** -0.0133*

(0.00413) (0.00412) (0.00416) (0.00510) (0.00742)

Trade -0.000736 -0.000577 -0.000425 0.00143 -0.00240

(0.00200) (0.00199) (0.00200) (0.00205) (0.00290)

GDP per capita 6.75e-05*** 6.47e-05*** 7.00e-05*** 4.33e-05** 6.70e-05***

(2.11e-05) (2.11e-05) (2.11e-05) (2.15e-05) (2.19e-05)

Telephone 0.00125** 0.00149** 0.00177*** 0.00135* 0.00274***

(0.000625) (0.000635) (0.000680) (0.000711) (0.000790)

Population -3.03e-09**

(1.52e-09)

Urban population -0.0343* -0.0270 -0.0445**

(0.0180) (0.0187) (0.0192)

Polity -0.0274

(0.0171)

Economic freedom -0.0238

(0.0540)

Constant 3.479*** 3.716*** 5.504*** 5.443*** 6.146***

(0.200) (0.232) (1.080) (1.094) (1.140)

Observations 722 722 722 682 650

R-squared 0.062 0.067 0.067 0.049 0.085

Number of countries 73 73 73 69 67

Standard errors in parentheses

*** p \ 0.01, ** p \ 0.05, * p \ 0.1

17 The threshold is usually considered to be 10. If VIF is above 10, then there is reason to worry.

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We also check for the explanatory power of the set of independent variables for

our specifications. In other words, we check whether we are omitting crucial

determinants of culture from our specifications. We perform Ramsey test to check

the power of the fitted variables and based on the p value, the null hypothesis cannot

be rejected. So we can conclude that we do not have specification error in our

models.

Instead of considering averages for growth for the period 1994–2004, we include

GDP per capita figures as well as institutional constraints figures for 1960 and

1970,18 respectively. A country which was comparatively richer in 1960 or had

efficient institutional constraints should have a different informal institutional set up

than a country which was really poor during the same period. The source of these

variables is the database from the article by Glaeser et al. (2004). The results are

robust to the inclusion of both growth rates of 1960 and 1970, respectively.

We consider other proxies of informal institutions or culture from the WVS and

EVS database but we take the data directly from the Quality of Government

Institute (QOG) database. They have considered the cross section 1999–2002 from

the WVS data. We consider an average of all variables over the period 1994 to

2002. The dependent variable, as mentioned, is considered over the period 1999 to

2002. Many of these indicators of informal institutions are not available for many

countries in our sample. So we run univariate regressions. We also check our results

by adding controls later.

We consider the question that whether people have respect for human rights and

the percentage of people that have ‘a lot of respect’ for such rights is used to capture

the numbers for the different countries. We find that with higher press freedom

scores, the percentage goes up. Similarly, we consider another question ‘Democ-

racy19 may have problems but is better’ and again we find that with higher press

freedom, the percentage of people who agrees strongly with this particular question,

is higher.

6 Conclusion

In this paper, we establish that press freedom and culture has a strong significant

association. As the press gets freer in a country, the culture score for the country

gets better. Our findings are supported by both cross sectional and panel

specifications and several robustness tests. The implications of the paper dilute

the loose claim that globalization and the advent of a free press destroys indigenous

18 Polity average is highly correlated with press freedom average and thus, we considered other proxies

of formal institutions lagged several periods. The correlation coefficient of press freedom with the lagged

variables is within reasonable range.19 We also consider a series of questions which seek people’s opinion about the political system of a

country. Again the percentages of people who answer ‘very good’ on these questions constitute the score

for each category for each country. The questions are ‘having a strong leader’, ‘having experts make

decisions’ and ‘having the army rule’. For all the cases, press freedom has a significant negative impact

on these indicators. Thus, with greater press freedom people are more conscious and feel very strongly

against all these issues.

110 Eur J Law Econ (2013) 36:95–115

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cultures. Instead, as claimed by Cowen (2002), it makes the cultural pie bigger and

better. As mentioned before, both media and culture have various other aspects that

have not been empirically investigated so far. So there are reasons to believe that

many other facets of culture can be influenced more by media than has been studied

here. Those unattempted questions are open to future research and more importantly

depend on the availability of reliable data.

Acknowledgments We are thankful to the Editor, the referee, Peter T. Leeson, Justin Ross and the

seminar participants at Southern Economic Association (2009) for indispensable comments and

suggestions. The comments and suggestion greatly enhanced our paper.

Appendix 1

See Table 5.

Appendix 2

See Table 6.

Table 5 List of countries

Albania Chile Germany Lithuania Philippines Taiwan

Algeria China Greece Luxembourg Poland Turkey

Argentina Colombia Hungary Macedonia Portugal Uganda

Armenia Croatia Iceland Malta Romania Ukraine

Australia Czech Republic India Mexico Russia UK

Austria Denmark Indonesia Moldova Serbia and

Montenegro

USA

Azerbaijan Dominican

Republic

Iran Morocco Singapore Uruguay

Bangladesh Egypt Ireland Netherlands Slovakia Venezuela

Belgium El Salvador Italy New

Zealand

Slovenia Vietnam

Bosnia-

Herzegovina

Estonia Japan Nigeria South Africa Zimbabwe

Brazil Finland Jordan Norway Spain

Bulgaria France South

Korea

Pakistan Sweden

Canada Georgia Latvia Peru Switzerland

Table 6 Correlation matrix

Press freedom GDP Growth Trade Polity Democracy Eco freedom

Press freedom – 0.21 -0.22 0.24 0.83 0.87 0.47

GDP 0.21 – -0.08 -0.28 0.18 0.20 0.28

GDP growth -0.22 0.08 – 0.08 -0.34 -0.32 0.09

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Appendix 3

See Table 7.

Table 7 Data description and sources

Variable Data description Source

Culture The sum of three positive beliefs (control,

respect, trust) minus the negative belief

(obedience)

European and World Values Surveys

1981–2007

Population Total population World Development Indicators (2007)

Land area Total land area of a country World Development Indicators (2007)

GDP

growth

Growth of GDP per capita, PPP basis, constant

2000 international dollars

World Development Indicators (2007)

GDP GDP, constant 2000 international dollars World Development Indicators (2007)

GDP per

capita

GDP per capita, constant 2000 international

dollars

World Development Indicators (2007)

GDP per

capita

GDP per capita, PPP, constant 2005

international dollars

World Development Indicators (2009)

Polity 2 The Index is constructed by subtracting the

autocracy score from the democracy score. It

ranges from -10 to ?10

Polity IV

Democracy The index is measured on a scale from 0 to 10

with 10 representing most democratic

Polity IV

XKONST Extent of institutional constraints on the

decision making powers of the chief executive

Polity IV

POLCOMP Based on regulation and competitiveness of

participation scores

Polity IV

PARCOMP Degree of competitiveness present in the

political arena

Polity IV

ELF Ethnolinguistic fractionalization index Glaeser et al. (2004) database

Religious

affiliations

Percentage of population belonging to

protestant, muslim, catholic or other religions

La Porta et al. (1999) database

Geography Measured as the absolute value of the latitude of

the country, scaled to values between 0 and 1

(0 is the equator)

La Porta et al. (1999) database

Table 6 continued

Press freedom GDP Growth Trade Polity Democracy Eco freedom

Trade 0.24 -0.28 0.08 – 0.09 0.12 0.26

Polity 0.83 0.17 -0.34 0.09 – 0.98 0.42

Democracy 0.87 0.20 -0.32 0.12 0.98 – 0.48

Eco freedom 0.47 0.28 0.09 0.26 0.42 0.48 –

112 Eur J Law Econ (2013) 36:95–115

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