Societal organization – complexes of economic, legal, political, social, and moral institutions – is highly correlated with per capita income in contemporary societies: most developing countries are “collectivist,” whereas the developed West is “individualist.” In collectivist societies the social structure is “segregated,” in the sense that each individual interacts socially and economically mainly with members of a particular religious, ethnic, or familial group. Within these groups, contract enforcement is achieved through informal economic and social institutions. Little cooperation exists between members of different groups, but members of collectivist societies feel involved in the lives of other members of their group.

In individualistic societies, the social structure is “integrated,” in the sense that economic transactions are conducted among people from different groups, and individuals frequently shift from one group to another. Contract enforcement is achieved mainly through specialized organizations, such as courts. Self-reliance is highly valued.

Sociologists and anthropologists believe that the organization of society reflects its culture, an important component of which is cultural beliefs. Cultural beliefs are the shared ideas and thoughts that govern interactions among individuals and between them, their gods, and other groups. Cultural beliefs differ from knowledge in that they are not empirically discovered or analytically proved. Cultural beliefs become identical and commonly known through the socialization process, by which culture is unified, maintained, and communicated.

That cultural beliefs influence outcomes is intuitive, but formal examination of the relations between cultural beliefs and societal organization is subtle.