Is cultural diversity good or bad, desirable or not? Opinions on this question seem to be totally split with almost irreconcilable differences of opinion.

There is some evidence that cultural diversity is actually good for the economy by fostering innovation.

A recent paper forthcoming in the Journal of Political Economy measures diversity of cultural capital by surname diversity. There, culture is defined as "information stored in people's heads that they acquired through social learning – by observing listening to and copying others." Cultural information capital tends to be acquired, accumulated and disseminated in family networks. Family networks are often identified by surnames. Lists of surnames can therefore be used to construct measures of cultural diversity.

Not much cultural diversity if everyone is called Smith.

The authors construct measures of cultural diversity based on surnames for the counties in the US from 1850 to 1940.

The authors also collect data on innovative activity measured by patents and then estimate the causal effect of cultural diversity on patenting activity.

Here is what they find:

Diversity is good for innovation.

Imagine that you are comparing two counties that are equal in all respects, except county 1 has cultural diversity that is one standard deviation larger than in country 2. Their results indicate that such change in diversity would increase the patenting rate by over 100% relative to the mean.

That is very large!

You might say there are all kinds of patents granted on ideas that never amount to much. When the authors consider breakthrough patents, those that become substantial commercial successes, the analogous effect is about 80%.

This is also very large!

What do we make of this result? Instead of condemning diversity and fighting diversity, we might as well embrace it, foster it. It might be good for the country.

Reference:

Posch, Max, Jonathan Schulz, and Joseph Henrich. "How Cultural Diversity Drives Innovation." (2025).