Cultural economics studies how culture influences the economic outcomes. Culture described as the preferences and beliefs that a given group share and identify with. Cultural economics examines a myriad of application that includes; social norms, beliefs, religion, ideology, trust, social identity, terrorism, redistributive justice, hatred, and fertility. Moreover, it describes how behavior and ideas are spread and communicated amongst the people through social networks, social learning, and social capital. These features are expressed in empirical and theoretical modeling, and case studies, through theories of information cascades and social evolution.
The origin of Cultural Economics
The background of cultural economics is rooted in need to understand the formation of tastes and wants in the society. For instance, the environment within which one is brought up in has a significant influence on their tastes and wants in the future. This acquisition of these tastes explains how preferences are socially formed.
The key distinction between cultural economics and the traditional economics is based on the decision-making process of individuals. Cultural economists argue that individuals arrive at their decisions by integrating trajectories, explicit and implicit decisions. On the other hand, traditional economist claim that the decisions made by the people and hence consequences are explicit and implicit only. It is not worthy that the trajectories, incorporated by the cultural economists, act as guidance in decision making to the individuals and are usually built up over the years. In the recent years, the economists have sought to absorb the system thinking approach into the study of cultural economics; which involves incorporating the interdependencies of culture and economy as a single system hence making it easy to comprehend.