How Can Language Policy Affect Economics?


In a recent episode of the “Economics Out Loud” podcast, President and Professor of the New Economic School Shlomo Weber talked about the interconnections between economics and language. How does language influence thinking? What does linguistic diversity bring? Why is economic policy important? We are sharing answers to these and other questions.


Tell Me What Language You Speak and I'll Tell You Who You Are?

Charles V, Holy Roman Emperor, is credited with saying: "I speak Spanish to God, Italian to women, French to men, and German to my horse." In other words, each language allows you to express emotions in its own way. Meanwhile, it can also influence them.

The impact of language on thinking, relationship to reality, and society has been a subject of research for centuries. In the 20th century, American scholars Edward Sapir and Benjamin Lee Whorf came to the conclusion (later their ideas were called the “Sapir–Whorf hypothesis”) that the structure of language influences our ideas about the world. There are two forms of this hypothesis – strong and weak: language either determines or only influences our perception of reality. Most linguists who agree with this hypothesis adhere to the second, weak, form.

A younger area of research is the economics of language. Its development is associated with the name of Jacob Marschak, an American economist of Russian origin. He was born in Kyiv in 1898, joined the Menshevik Party, and at the age of 19 became the Labor Minister of the Terek Soviet Republic. Later, he emigrated to Germany, from where he moved to the UK and finally to the US. Shortly before his death in Los Angeles, he was elected president of the American Economic Association. Marschak was always interested in languages; he was a polyglot and in 1965 published an article that he entitled "The Economics of Language". It can be called a reference starting point for this branch of economic science. Since then, a lot of research has appeared on the relationship between language and economics. A review of these academic papers and achievements was done by me together with Professor Victor Ginsburgh of the Free University of Brussels (attached to this post).

A famous paper on this topic was written by Keith Chen from Yale University. He divided the languages into two groups – with strong and weak future time reference (FTR) – depending on whether or not there is a grammatical difference between the present and the future tenses (‘it will rain tomorrow’ or ‘it rains tomorrow’ ). The first group includes, for example, Spanish, French, partly English, Russian, while German, Chinese, Japanese, Scandinavian languages belong to the second group. Chen concluded that weak-FTR speakers are 31% more likely to have saved in any given year, have accumulated 39% more wealth by retirement, are 24% less likely to smoke, are 29% more likely to be physically active, and are 13% less likely to be medically obese. Countries which speak weak-FTR languages save on average 6% more of their GDP per year. For those people who speak such languages, the future has already arrived and it's time to take care of it.


Science Wars

Each science is like a state, defending its borders, willing to have customs and an army, and not let in specialists from other fields without a "visa". When we, economists, wrote papers about language, linguists were outraged that with our figures and formulas, we were invading a field that, in their opinion, could not be measured. Economists are often – and perhaps for a reason – accused of imperialism.


Copulative Conjunction in English

There is a well-known statement of the Dutch sociologist Abram de Swaan that globalization takes place in English. But in fact, globalization happens in broken English. Language is not an absolute thing, it is very important how well you speak it. This influences the understanding of a country's laws, institutions, and respect for them. Pidgin English, Creole languages, Spanglish (a hybrid of Spanish and English in America): the creation of such semi–languages, on the one hand, can bring its speaker closer to the culture of the principal language, and on the other it can separate somebody from that culture. And if a person gets stuck halfway, then his or her participation in institutional development becomes limited.


Does the Difference Matter?

Diversity is very much welcome in economics. This may also be true of languages. For example, greater ethnolinguistic diversity in American cities is accompanied by higher wages. But too much diversity can also be a problem. Linguistic and ethnic diversity may have been one of the reasons for the growth tragedy in sub-Saharan Africa. According to William Easterly of New York University and Ross Levine of the University of California at Berkeley, ethnolinguistic diversity largely explains the difference in the growth rates between the African countries and the East Asian countries.

However, it is not so much diversity that matters, as the attitude towards it, the way how different groups of people relate to each other. For example, in New York and Los Angeles, people from all over the world are mixed. And in a town in the central part of the United States, the arrival of two families of Syrian immigrants can turn things upside down.


The Language of Discord

Society should be aware of how important linguistic independence and at the same time linguistic unity are for the development of the country. It is impossible to make a thousand languages official – no communication will work out in such an environment, but it is also impossible to violate the rights of minorities to maintain their identity. Policies that restrict people's right to use their language can have the most tragic consequences. In Sri Lanka, for example, discrimination against the Tamil language has become one of the causes of the bloody conflict between Tamils and Sinhalese (both Sinhalese and Tamil are now officially recognized in the country).

Changing the language policy can lead to unexpected consequences. An interesting case is the experience of the Indian state of West Bengal, where in 1983 the communist government abolished compulsory teaching of English at the primary level in public schools. Studies have shown that this decision led to a decrease in academic standards and did not make education more accessible to children from the poorest families. At the same time, the premium for the proficiency in English has increased in the labor market. In Morocco, the abolition  of the compulsory study of French has led to a substantial reduction in the returns to schooling. Haiti is an example of a country where insufficient attention to learning English and Spanish has contributed to the country's economic problems. These problems are particularly notable compared to the prosperous neighboring Dominican Republic, where the official language is Spanish.

India at some point created a trilingual system with Hindi, English and the local language. But to a large extent, the spread of Hindi was promoted by Bollywood, where films in this language were produced. Young people watched these films and started learning Hindi.