Individualism, Innovation, and Economic Growth

Individualism is on trial. Its proponents claim that it encourages social progress and generates economic opportunity. Its accusers contend that it breeds selfishness and economic injustice. But what does the evidence show?

The results are in, and the data is clear: individualist societies are objectively more innovative and more productive than their collectivist counterparts.

The Data Doesn’t Lie

In a 2012 study, scholars from George Washington University and the Georgia Institute of Technology analyzed datasets of culture and innovation spanning two decades and 62 countries. They concluded that “most measures of individualism have a strong, significant, and positive effect on innovation, even when controlling for major policy variables” (1). One particular feature of individualist cultures stood out as having the strongest positive effect on innovation: the “freedom allowing for the individual pursuit of happiness” (3). Jefferson would be proud.

The researchers didn’t just find a positive correlation between individualism and innovation — they also found a strong negative correlation between innovation and collectivism. Some “types of collectivism,” the researchers wrote, “not only harm innovation rates, but may hurt progress in science worse than technology.”

The Social Incentive

These results corroborated earlier findings by researchers at UC Berkeley and the National Bureau of Economic Research, which demonstrated a strong correlation between individualism, innovation, and economic growth. In their survey of 80 countries, researchers found that “countries with a more individualist culture have more innovation, higher productivity and higher long-run growth than countries with a more collectivist culture” (2). They explained their results as follows:

“Individualist culture attaches social status rewards to personal achievements and thus provides not only monetary incentives for innovation but also social status rewards… thus, [individuals] allocate more labor to innovative activities. As a result, the higher innovation rate in an individualist culture eventually leads to higher levels of productivity and output in the long run than a collectivist culture.”

Because individualist cultures reward innovators with social recognition, the quest for innovation becomes an essential part of the individual’s pursuit of happiness. But there’s another reason why individualism builds a bridge between happiness and innovation. As humans, we all intuitively understand that our own happiness is closely related to our ability to create positive experiences for those around us. Because innovation is one of the ways in which we can add value to the lives of others, societies that provide their members with the liberty to pursue their individual happiness also incentivize them to generate social and economic value through innovation.

Despite hypothetical arguments to the contrary, empirical research has time and again confirmed that individualism elevates both individuals and societies towards greater wellbeing.