Late June saw the leading scientific journal, Science, publish an article ranking a sample of 40 countries in civic honesty, where people voluntarily refrain from opportunistic behavior. Worryingly for Arab and Islamic countries, they dominated the lowest positions in the rankings, while the highest positions were reserved for the countries with the highest living standards. While it is difficult to demonstrate a definitive causal relationship between civic honesty and economic success, the data should make policymakers think hard about the need to make people trust each other more as part of their economic strategies.
The authors of the paper, titled “Civil honesty across the globe,” conducted an experiment whereby a covert associate would return a “lost” wallet to one of five societal institutions (a bank, theater/museum, post office, hotel, or police station). The wallet would contain the contact details of the fictitious owner- an email address was created by the researchers- as well as some money and some personal possessions. The associate would say that they were in a hurry, and ask the receiving staff to assist in returning the wallet to its rightful owner. They did this with 17,000 wallets across 40 countries, allowing them to create a ranking of the 40 countries in terms of the likelihood that the lost wallet be returned.
Students of economics should be unsurprised by the top five countries: Switzerland, Norway, the Netherlands, Denmark, and Sweden, with approximately 70 percent of wallets returned. The bad news for the Arab and Islamic world was the bottom 10, which included countries like Turkey, Ghana, Indonesia, Morocco, and China.
Why should this matter? As the authors argue in the paper’s opening paragraph, honesty can make important contributions to the economy: it helps ensure that contracts are enforced, that taxes are paid, that government officials avoid corruption, that charitable organizations function effectively, and so on. While economists have long established the importance of impartial enforcement of the rule of law to economic performance, the most advanced societies do not rely exclusively on the government’s heavy hand to ensure that the law is respected: they also lean on social norms, including people feeling a civic duty to behave responsibly.
So why did Arab and Islamic countries perform so badly? Many scholars have provided theories that seek to explain the general economic underperformance of Islamic countries. According to these scholars, in the Islamic world, trust in organizations - such as banks or supermarkets - is low compared to western countries, and people’s trust in those outside their network of family members and acquaintances is also limited, which impairs the economy considerably.
For example, in the Gulf countries, including Saudi Arabia, the corporate finance sector is underdeveloped, meaning that when young entrepreneurs have good ideas on a new product or service, they find it very difficult to secure the requisite funding - much more so than in the countries that were ranked highest in civic trust, such as Denmark or Switzerland. Investors fear that the system doesn’t offer sufficient protection for their capital, while the entrepreneurs fear that the system doesn’t offer sufficient protection for their intellectual property. These systemic weaknesses go hand-in-hand with weaknesses in the level of civic trust more generally.
So what can governments do about it? The paper’s authors also examined the variables that were positively associated with civic trust. Some of them - such as economically favorable geographic conditions (temperate climate, access to waterways) - are beyond the control of even the most ambitious government. One of the ones that will be of particular interest to the Gulf countries is education, confirming the view that investing in human capital yields returns that go beyond making people more skilled and capable members of the workforce.
Education works both in the general sense (people who are more enlightened and knowledgeable typically behave in a more civic-minded way), and in the specific sense when children are taught constructive social norms. Thus, reforming educational curricula is needed so that they contain cultural components, not as an afterthought, but based on a genuine belief that they contribute to societal well-being. Naturally, such reforms need to be supported by complementary reforms in society more generally, such as in combating corruption, but there is little doubt that starting with the impressionable young minds of primary school students is a positive step.
While the authors do not have data on the same 40 countries (geographical territories) from the 9th century, the economic supremacy of the Arab and Islamic world during that time suggests that perhaps they would have topped the rankings, while the Europeans were languishing in the Dark Ages. In the 21st century, Arab and Islamic governments needs to use this parable to remind themselves of the fact that their countries have the capacity to be economic leaders, and that things can change for the better just as they can change for the worst.
Omar Al-Ubaydli (@omareconomics) is a researcher at Derasat, Bahrain.