Tolerance and growth: modeling the empirical relationship
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Tolerance and growth: modeling the empirical relationship Niclas Berggren · Mikael Elinder
Received: 2 October 2012 / Accepted: 11 October 2012 / Published online: 9 November 2012 © Springer Science+Business Media New York 2012
Abstract We showed, in Berggren and Elinder (2012), that tolerance toward homosexuals is negatively and quite robustly related to economic growth. In a comment, Bornhoff and Lee (this issue) question this finding on model-specification grounds. By undertaking three changes, they purport to show that our main result does not hold. In this article, we demonstrate that one of these changes is inconsequential (replacing GDP per capita by its logarithm in controlling for conditional convergence) and argue that two of them are questionable. First, the removal of certain central control variable risks introducing omitted variable bias and inconsistent estimates. Second, regional dummy variables are added on arbitrary grounds. For example, by using regional dummy variables that are just as reasonable as the Baltic dummy used by Bornhoff and Lee, we find that significance for tolerance toward homosexuals reappears in our empirical model. In all, this implies that there are good grounds for considering the negative relationship between tolerance towards homosexuals and growth valid, Bornhoff and Lee’s claims notwithstanding. Keywords Tolerance · Growth · Diversity JEL Classification O40 · Z13
This reply refers to the article available at doi:10.1007/s11127-012-0022-1. N. Berggren () Research Institute of Industrial Economics, P.O. Box 55665, SE-102 15, Stockholm, Sweden e-mail: [email protected] N. Berggren Department of Institutional Economics, Faculty of Economics, University of Economics in Prague, Prague, Czech Republic M. Elinder Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden e-mail: [email protected] M. Elinder Research Institute of Industrial Economics, Stockholm, Sweden
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Public Choice (2012) 153:495–502
1 Introduction In Berggren and Elinder (2012), we offered, for the first time, a cross-country analysis of how tolerance affects economic growth. We looked at two types of tolerance, toward homosexuals and toward people of a different race, and found a quite robust negative effect of tolerance toward homosexuals on growth. This result was almost without exception statistically significant, both in cross-sectional and in panel-data regressions, and it withstood several sensitivity tests. The estimated coefficients indicated that an increase in tolerance toward homosexuals of 10 percentage points entails a decrease in the growth rate by 0.3–0.4 percentage points.1 As for tolerance toward people of a different race, we did not find as robust results. The sign of the estimated coefficient was, however, positive throughout. In a comment, Bornhoff and Lee (this issue: Section 5), henceforth denoted BL, state the following: Our results, however, explain growth better with more attention to initial conditions. We conclude that the concern in BE
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