Pronoun Drop as an Instrumental Variable

ABSTRACT A growing literature in comparative economics uses linguistic structure in empirical work to explain differences in culture and economic behavior, through the theoretical mechanism of linguistic relativity (or the “Sapir–Whorf hypothesis”). This paper explores the usage of one of these variables, pronoun drop, which denotes whether or not a language makes the first‐person subject pronouns optional, and its application as an instrument for culture. It ultimately argues that, even though this application is now common, it clearly violates the independence assumption because culture can affect language just as language can affect culture. It speculates further on the implications for other linguistic variables, both as instruments and when used as explanatory variables.