Political imagery on money relates to less political freedom & more gender inequality; more scientific & agricultural images on money relate to less economic, political freedom, human development & gender equality.

Using currency iconography to measure institutional quality. Kerianne Lawson. The Quarterly Review of Economics and Finance, Volume 72, May 2019, Pages 73-79. https://doi.org/10.1016/j.qref.2018.10.006

Highlights
•    Countries with more political imagery on their money tend of have less political freedom and more gender inequality.
•    More scientific & agricultural images on money correspond with less economic freedom, political freedom, human development & gender equality.
•    More art related and cultural images on money correspond with higher economic freedom and human development index scores.
•    More religious images on money correspond with less political freedom. And for OPEC countries, also less economic freedom.
•    For non-Commonwealth nations, images of women on money correspond with more political freedom, human development & gender equality.

Abstract: The images on a country’s currency are purposefully chosen by the people or government to be representative of that country. Potentially, one could learn a lot about the economic and political climate of a country by simply looking at the pictures on its money. This paper reports indexes measuring the political, religious, and cultural/scientific content as well as the representation of women on currency notes. The analysis suggests that we can look to the iconography in currency as an indication of the quality of the institutions or socio-economic outcomes in that country.


2. Survey of related literature

The iconographic analysis of currency notes is a much-discussedtopic in disciplines outside economics. Sociologists, historians,anthropologists, and many others have looked at the images on cur-rency notes to discuss the social and political environment within acountry. There is even a ‘Bank Note of the Year’ contest held by theE-mail address: knl0013@mix.wvu.eduInternational Bank Note Society, which is decided by vote. Votersevaluate the “artistic merit, design, use of [color], contrast, bal-ance, and security features of each nomination” (IBNS Banknoteof the Year, 2018). It is widely accepted that the images on a coun-try’s currency hold significance, so they are worthy of discussion.

Most of the iconographic work on money looks at a single coun-try’s currency: Denmark (Sorensen, 2016), Ghana (Fuller, 2008),Indonesia (Strassler, 2009), Laos (Tappe, 2007), Scotland (Penrose& Cumming, 2011), Palestine (Wallach, 2011), Taiwan (Hymans &Fu, 2017), and the former Soviet Union (Cooper, 2009).

While most scholars have looked at a country’s currency at apoint in time, Schwartz (2014) examined the change in imageson Chinese currency from the 1940s to the 1990s. In particu-lar, he examined the use of classical socialist, including Soviet,imagery on the Yuan. An oncoming train, for example, symbolizesthe inevitability of the socialist revolution. Peasants and work-ers looking off into the distance reflected another theme in Sovietart, common people wistfully looking toward a promising socialistfuture. Mao’s absence on the Yuan note until after his death mightbe attributed to communist ideas around money, and Mao him-self said the achievements of an individual should not be glorified.

However, this is in direct contradiction with basically every otherform of media, which painted Mao as practically a divine being.Schwartz argues that keeping his face off of the currency was astrategic decision to dissociate him from the state and maintain hisimage as an ally to the masses.

Hymans (2004) investigated the evolution of currency iconogra-phy in Europe from the 19thcentury to the era of the Euro. He foundthat there were iconographic changes over time that reflected thesocial changes and trends we know from history. And yet, there arefew iconographic differences across the European countries at anypoint in time. Hymans suggests that the images on European coun-tries currencies were probably not used as propaganda towardstheir own citizens, but rather to mirror the values of their neigh-bors to legitimize themselves and fit in with a broader, collectiveEuropean identity.

An unrelated strand of literature within economics has beentrying to find new, unconventional ways to measure social or eco-nomic conditions. Chong, La Porta, Lopez-de-Silanes, and Shleifer,(2014) mailed letters to nonexistent addresses of businesses andthen graded government efficiency by how promptly, if at all, theletters were returned. The goal was to create an objective mea-sure of government efficiency across the 159 countries observed.They found that their measures of efficiency correlated with otherindicators of government quality.

Henderson, Storeygard, and Weil, (2012) used satellite imagesof nighttime lights to estimate economic activity. They found thattheir estimates were different by only a few percentage points fromthe official data. However, their method allowed for more specificregional and international analysis that was not possible from otherconventional ways to collect this data.

Fisman and Miguel (2007) measured government corruption byrecording foreign diplomat parking violations in New York City.Thanks to diplomatic immunity, foreign diplomats may legallyignore parking tickets, but many still do pay them voluntarily.Diplomats from highly corrupt countries did in fact pay less thanthose from other less corrupt countries. Thus, parking ticket pay-ments may serve as a proxy for the cultural norms in the homecountry.

This paper attempts to unite the literature on the iconogra-phy of currency with the literature using unconventional methodsto measure country-level characteristics. The images found on anation’s currency may be indicators for socio-economic conditionsor underlying institutional quality. Unlike the previous literaturewhich looks at why a currency’s iconography has changed overtime in a certain country or region, this project seeks to answer thequestion: is currency iconography a good indicator of institutionalquality for all countries?