Diversity and a taste for power

Abstract We use differences in cultural norms regarding individualism to explain preference heterogeneity about power/authority over aspects of one’s own work. Using matched employee-establishment data and an international index of individualism, we find causal evidence that inherited individualism increases the marginal satisfaction from workplace authority or power. To account for endogeneity, we instrument for authority using equivalent employees in a different but similar country. We also include establishment random effects, pay and other individual characteristics. Robustness checks include: instrumenting for individualism using genetic distance of blood types; using a binary measure of satisfaction as a dependent variable; alternative instruments; prevalence of teams; and estimating the relationship for non-managers only. These results confirm the complementary between individualism and power at work. A placebo test confirms the relationship is specific to power rather than other sources of satisfaction (JEL D23, D90, L22, L23).