Abstract

This paper posits that individual cultural preferences for pro-ecological behaviour underpin the aggregate shift of the local economic system towards the development of a circular economy. The main take of this study is that local cultural capital (as a context) determines the social capital, which in its turn affects the local modes of economic activity. Economically speaking, cultural preferences (affecting social capital) are theorized as the cause of a shift in the demand curve for eco-favourable behaviour; this is echoed by the entrepreneurial supply which has a further consequence for the circularity of the economy. To operationalize our hypothesis, we use the local level of GVA and the local level of air pollution as alternative proxies for the local circular economy and explain their dependence on individual preferences for pro-ecological agency of the individuals and firms in the locality. We use data for 2,700 individuals in India in 2014 from the World Value Survey (WVS), augmented with regional indicators, obtained from various alternative sources. An important finding of our study is that individual disregard of the economy grows with the economic prosperity of the locality, however it is the local cultural capital that curbs the individual free riding on the ecological public resource and benefits the local shift towards the circular economy