The economic consequences of legal behaviour: Letter or spirit?
The way people navigate traffic can tell us a lot about their respective cultures. Recently, while walking to my office in midtown Manhattan, New York City, I stopped at a red light when an elderly woman with a walking stick caught my attention as she cautiously looked both left and right. When she saw that no car was close enough to hit her—assuming they adhered to New York’s speed-limit laws—she gave me a puzzled look and crossed the street.
I must admit, I felt a bit foolish. Such an incident would be unthinkable in Japan. Years ago, on the first night of a weeklong visit to Tokyo, my young jet-lagged children, who had lived only in India and the United States, were amazed by the law-abiding Japanese.
Peering out of our apartment window at midnight, they observed a man standing alone at a cross-walk. Even with no cars in sight, he waited patiently for the light to turn green. While these normative differences may seem trivial, societal attitudes towards the law can significantly affect a country’s economic performance.
Whereas the New Yorker’s actions could be interpreted as aligning with the spirit of the law, the Tokyo pedestrian adhered to its letter. A system that emphasizes the spirit of the law gives individuals discretionary power, leading to potential misuse or abuse. When individuals have latitude to decide how to behave, they might, for example, choose to disrupt traffic.
This is evident in the streets of New York, and, to a greater extent, in my hometown of Kolkata (formerly Calcutta). While the city is gradually adopting the Western model, during my youth Kolkata was a pedestrian’s paradise, where crossing the street required no more than a simple hand gesture. It is crucial to understand the strengths and
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