A popular explanation for economic development is that "individualistic values" provide a mind-set that is favourable to the
creation of growth-promoting institutions. The present paper investigates the relationship between individualistic values
and personal attitudes toward government intervention. We consider two key components of an individualistic culture to be
particularly relevant for attitude formation: self-direction ("social" individualism) and self-determination ("economic" individualism).
Results indicate that both are negatively associated with interventionist attitudes. Effects of self-direction are much weaker
though, than self-determination. Moreover, the effects of self-direction are mitigated through higher trust in the state and
lower confidence in companies, while that is not the case for self-determination values. We conclude that especially economic
individualism supports attitudes conducive to the formation of formal market-friendly institutions.
JEL-Codes:D70, D78, H10, L50
Keywords:Individualism, Self-direction, Self-determination, Government intervention, Institutional trust, Preference formation
Research group:Macroeconomics and European Economic Policy