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Culture, risk-taking, and public leadership: Evidence from Chinese villages

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  • Hong, Justin Jihao

Abstract

Many societies preserve traditional culture tied to economically relevant psychological parameters. This paper shows the substantial impact of traditional culture on public leadership and governance, leveraging widely-held zodiac beliefs about risk-avoidance in rural China, which follow an exogenous 12-year cycle based on a person’s birth year. Using a representative village panel, I find that village heads in their risk-avoidant zodiac years follow governance processes more and enhance villagers’ perception about responsiveness. I also observe consistent expenditure changes, with higher public good spending and a comparable decline in administration spending that is prone to misuse. However, treated leaders are also less likely to promote policy innovation. These results can be most easily reconciled with a shift in village heads’ risk-taking, which may yield a potential trade-off between accountability and public entrepreneurship.

Suggested Citation

  • Hong, Justin Jihao, 2026. "Culture, risk-taking, and public leadership: Evidence from Chinese villages," Journal of Development Economics, Elsevier, vol. 181(C).
    • Handle: RePEc:eee:deveco:v:181:y:2026:i:c:s0304387826000453
    DOI: 10.1016/j.jdeveco.2026.103762
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    Keywords

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    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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