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Informal rules and economic behaviour
The influence of social norms and ethical values that prevail in different socio-economic contexts upon economic behaviour is nowadays broadly recognised. Economists like Kenneth Arrow (1974: 23) have suggested that ethical values such as trust, loyalty and honesty are 'commodities . . .which increase the efficiency of the economic system'. Philosophers such as Hausman and McPherson (1993: 684) presented many studies confirming that 'moral constraints on behaviour may be instrumentally important to good economic performance'. Similarly, historians like David Landes (1998: 516) observed that 'the values and attitudes that guide members of society is the key to economic development of Nations'. By appropriately defining the influential social norms then, one can partly explain the economic disparities between societies as differences in the value system. Douglass North (2005a: 11) claimed that 'the human environment is a human construct of rules, norms, conventions and ways of doing things that define the framework of human interaction'. Finally, economists like Acemoglu, Johnson and Robinson (2005), using the analytical tools of economic growth theory, assert that 'differences in economic institutions are the fundamental cause of differences in economic development'. Beyond political institutions, which use their power to regulate economic activity, these economists also recognise that 'commitment problems are intrinsic to the exercise of political power' (2005: 391). Commitment problems arise when a social group with political power decides not to use it in its own favour or arbitrarily, for ethical reasons.
The main argument in our approach of the work of J.S. Mill and A. Marshall is that individuals follow a customary rule whenever they behave responding to the established norms and values in their social context (cf. Vanberg, 1993; Schlicht, 1998). Rules are 'conditional or unconditional patterns of thought or behaviour which can be adopted either consciously or unconsciously by agents' (Hodgson, 1997: 664). Rules can be either formal, and thus able to be enforced by law, or informal in the sense of unwritten codes of conduct that commonly exist in a particular spatio-temporal context. Social norms are ethical rules of behaviour shared by the members of a social group that 'specify what actions are regarded by a set of persons as...