CCHU9069 Humanities
Finance and Society: How Human Societies have Innovated to Deal with Risk

[This course is under the thematic cluster of ‘Sustaining Cities, Cultures, and the Earth’.]


Course Description

Why has violence declined in the last two millennia? How have human societies innovated and developed increasingly better ways to deal with the challenges of risk events such as natural disasters, climate shocks, epidemic virus, and wars? And how can financial knowledge help us understand the relationship between economic-social history and the history of civilizations? This course addresses these global issues from an interdisciplinary historical perspective, developing a risk-mitigation perspective on the evolution of human civilizations so that we can better understand how civilizations have evolved the way they have and how we, as potential investors and professionals, can better foresee future growth areas in frontier, emerging, and developed markets. The course explores a number of social innovations, including mythology or magic and supernatural beliefs, technologies, social structures and cultural norms, religions, financial markets and welfare states. This broad scope of knowledge on the historical evolution of risk-sharing arrangements allows us to embark on our quests to appreciate how cultures and institutions have each evolved historically as a way to maximize the probability of human survival, which in turn allows us to see where they can go as better risk-mitigating tools become available due to technological and financial progress.

Course Learning Outcomes

On completing the course, students will be able to:

    1. Describe and explain the relationship between economic-social history and history of civilizations.
    2. Apply finance and economics analytical frameworks to understand history, business, culture and society.
    3. Develop leadership skills for business and society.
    4. Develop global outlook and analytical thinking.
    5. Develop research training and presentation skills.

Offer Semester and Day of Teaching

Second semester (Wed)


Study Load

Activities Number of hours
Lectures 24
Tutorials 12
Seminars 5
Reading / Self-study 36
Assessment: Essay / Report writing 36
Assessment: Presentation (incl preparation) 10
Assessment: Examination 2
Total: 125

Assessment: 70% coursework; 30% examination

Assessment Tasks Weighting
Individual assignments 30
Participation in tutorials and discussion forum 20
Group project and presentation 20
Examination 30

Required Reading

Topic 1: Risk, violence, and early innovations in technology

  • Bai, Y., & Kung, J. (2011). Climate shocks and Sino-nomadic conflict. Review of Economics and Statistics, 93(3), 970–98.
  • Diamond, J. (1999, May 1). The worst mistake in the history of the human race. Discover.
  • Jia, R. (2013). Weather shocks, sweet potatoes and peasant revolts in historical China. Economic Journal, 124(575), 92-118.
  • Matranga, A. (2014). Climate-driven technical change: Seasonality and the innovation of agriculture. Job Market Paper.
  • Pinker, S. (2012). The better angels of our nature: Why violence has declined? Penguin Books. [Chaps. 1, 2 & 3]

Topic 2: Risk and supernatural beliefs: do they work as a response to risk and uncertainty?

  • Miguel, E. (2005). Poverty and witch killing. Review of Economic Studies, 72(4), 1153-1172.
  • Oster, E. (2004). Witchcraft, weather and economic growth in Renaissance Europe. Journal of Economic Perspectives, 18(1), 215-228.
  • Torgler, B. (2007). Determinants of superstition. The Journal of Socio-Economics, 36, 713–733.
  • Tsang, E. (2004). Toward a scientific inquiry into superstitious business decision-making. Organization Studies, 25(6), 923–946.

Topic 3: Marriage, family and social structure/cultural norms: do they work as a response to risk and uncertainty?

  • Alesina, A., & Giuliano, P. (2010). The power of the family. Journal of Economic Growth, 15, 93-125.
  • Chen, Z.,  He, S., Lin, Z., & Peng, K. (2014). Women as insurance assets: A study of bride-price in 18th and 19th century China. Working Paper.
  • Cheung, S. N. S. (1972). The enforcement of property rights in children, and the marriage contract. The Economic Journal, 82(326), 641-657.
  • Kung, J., & Ma, C. (2012). Can cultural norms reduce conflicts? Confucianism and peasant rebellions in Qing China. Unpublished Working Paper.
  • Low, B. (1990). Marriage system and pathogen stress in human societies. American Zoological Review, 30, 325-339.
  • Rosenzweig, M. R., & Stark, O. (1989). Consumption smoothing, migration, and marriage: Evidence from rural India. Journal of Political Economy, 97(4), 905-926.

Topic 4: Financial markets, religion, and the welfare state: do they supplement, or compete with, each other as responses to risk and uncertainty?

  • Chen, D. (2010). Club goods and group identity: Evidence from Islamic resurgence during the Indonesian financial crisis. Journal of Political Economy, 118(2), 300-54.
  • Dehejia, R., Deleire, T., & Luttmer, E. (2007). Insuring consumption and happiness through religious organizations. Journal of Public Economics, 91(1-2), 259-279.
  • Morse, A. (2011). Payday lenders: Heroes or villains? Journal of Financial Economics, 102(1), 28-44.
  • Scheve, K., & Stasavage, D. (2006). Religion and preferences for social insurance. Quarterly Journal of Political Science, 1(3), 255-286.
  • Scheve, K., & Stasavage, D. (2006). The political economy of religion and social insurance in the United States, 1910–1939. Studies in American Political Development, 20(Fall 2006), 132–159.

Topic 5: Finance as risk tools for national survival and the rise of the fiscal state: historical lessons for national financial strategies

  • Chen, Z. (2011). Financial strategies for nation building. Working Paper.
  • Mcdonald, J. (2006). A free nation deep in debt: The financial roots of democracy. Princeton University Press. [Chaps. 1, 3 & 8]
  • Shiue, C. H. (2004). Local granaries and central government disaster relief: Moral hazard and intergovernmental finance in eighteenth and nineteenth-century China. The Journal of Economic History, 64(1).

Topic 6: Finance as enabler of equality: is finance just for the rich, or better for the poor?

  • Calder, L. (2001). Financing the American dream: A cultural history of consumer credit. Princeton University Press, [Chaps. 4 & 5]
  • Davidoff, T., Brown, J., & Diamond, P. (2005). Annuities and individual welfare. American Economic Review, 95, 1573-1590.
  • Kerr, W., & Nanda, R. (2009). Financing constraints and entrepreneurship. NBER Working Paper, No. 15498.
  • Rajan, R. G., & Zingales, L. (1998). Financial dependence and growth. American Economic Review, 88, 559-586.

Recommended Reading

Topic 1: Risk, violence, and early innovations in technology

  • Burke, M., Hsiang, S., & Miguel, E. (2015, August). Climate and conflict. Annual Review of Economics, 7, 577-617.
  • Elias, N. (2000). The civilizing process: Sociogenetic and psychogenetic investigations. Blackwell Publishing.
  • Hsiang, S. M., Kyle, M., & Cane, M. (2011). Civil conflicts are associated with the global climate. Nature, 476(7361), 438-441.
  • Miguel, E., Satyanath, S., & Sergenti, E. (2004). Economic shocks and civil conflict: An instrumental variables approach. Journal of Political Economy, 112(4), 725-753.

Topic 2: Risk and supernatural beliefs: do they work as a response to risk and uncertainty?

  • Barber, N. (2011). A cross-national test of the uncertainty hypothesis of religious belief. Cross-Cultural Research, 45(3) 318–333.
  • Buyandelgeriyn, M. (2007, February). Dealing with uncertainty: Shamans, marginal capitalism, and the remaking of history in postsocialist Mongolia. American Ethnologist, 34(1), 127-147.
  • Ekelund, R., Herbert, R., & Tollison, R. (1992). The economics of sin and redemption: Purgatory as a market-pull innovation? Journal of Economic Behavior and Organization, 19, 1-15.
  • Legare, C., & Souza, A. (2014). Searching for control: Priming randomness increases the evaluation of ritual efficacy. Cognitive Science, 38, 152–161.
  • Schiff, S. (2015, September 7). The witches of Salem: Diabolical doings in a puritan village. The New Yorker. From http://www.newyorker.com/magazine/2015/09/07/the-witches-of-salem

Topic 3: Marriage, family and social structure/cultural norms: do they work as a response to risk and uncertainty?

  • Bergstorm, T. (1994). On the economics of polygyny. Technical Report. University of Michigan.
  • Bergstorm, T. (1996). Economics in a family way. Journal of Economic Literature, 34(4), 1903-1934.
  • Bunkanwanicha, P., Fan, J., & Wiwattanakantang, Y. (2010). Why do shareholders value marriage? ESCP Europe working paper.
  • Clark, G. (2014). The son also rises: Surnames and the history of social mobility. Princeton University Press.
  • Ehrlich, I., &. Becker, G. S. (1972). Market insurance, self-insurance, and self-protection. Journal of Political Economy, 80(4), 623-648.
  • Gray, R. F. (1960). Sonjo bride price and the question of African ‘Wife Purchase’. American Anthropologist, 62, 34-57.
  • Hoogeveen, H., van der Klaauw, B., & van Lomwel, C. (2004). On the timing of marriage, cattle and weather shocks. Tinbergen Institute Discussion Paper.
  • Rosenzweig, M. R. (1988). Risk, implicit contracts and the family in rural areas of low-income countries. The Economic Journal, 98, 1148-70.
  • Rowe, W. (1998, October). Ancestral rites and political authority in late imperial China: Chen Hongmou in Jiangxi. Modern China, 24(4), 378-407.

Topic 4: Financial markets, religion, and the welfare state: do they supplement, or compete with, each other as responses to risk and uncertainty?

  • Chen, D., & Lind, J. (2007). Religion, welfare politics, and church-state separation. Journal of Ecumenical Studies, 42(1), 42-52.
  • Goetzmann, W., & Rouwenhorst, G. (2009). The origins of value. Princeton University Press. [Chaps. 1 & 7]
  • Gruber, J., & Hungerman, D. (2007). Faith-based charity and crowd – Out during the Great Depression. Journal of Public Economics, 91(5-6), 1043-1069.
  • Iannoccone, L. (1998). Introduction to the economics of religion. Journal of Economic Literature, 36(3), 1465-1496.
  • Kuran, T. (2011). The long divergence: How Islamic law held back the Middle East. Princeton University Press.
  • Miller, A., & Hoffmann, J. (1995). Risk and religion: An explanation of gender differences in religiosity. Journal for the scientific study of religion, 34(1), 63-75.
  • Murray, J. B. C. (1866). The history of usury: From the earliest to the present time. J.B. Lippincott & Co.

Topic 5: Finance as risk tools for national survival and the rise of the fiscal state: historical lessons for national financial strategies

  • Besley, T., & Persson, T. (2009). The origins of state capacity: Property rights, taxation and politics. American Economic Review, 99(4), 1218-44.
  • Ferguson, N. (2009). The ascent of money: A financial history of the world. Penguin Books.
  • Shiue, C. H. (2005). The political economy of famine relief in China, 1740–1820. Journal of Interdisciplinary History, xxxvi:1(Summer), 33–55.
  • Stasavage, D. (2011). State of credit: Size, power, and the development of European polies. Princeton University Press.

Topic 6: Finance as enabler of equality: is finance just for the rich, or better for the poor?

  • Clarke, G. R. G., Xu, L. C., & Zou, H. -F. (2006, January). Finance and income inequality: What do the data tell us?. Southern Economic Journal, 72(3), 578-596.
  • King, R., & Levine, R. (1993). Finance, entrepreneurship, and growth: Theory and evidence. Journal of Monetary Economics, 32, 513-542.
  • Levine, R., & Demirguc-Kunt, A. (2001). Financial structure and economic growth: A cross-country comparison of banks, markets, and development. MIT Press, Cambridge, MA.

Course Co-ordinator and Teacher(s)

Course Co-ordinator Contact
Professor Z. Chen
Asia Global Institute and School of Economics and Finance, Faculty of Business and Economics
Tel: 2219 4967
Email: zhiwu.chen@hku.hk
Teacher(s) Contact
Professor Z. Chen
Asia Global Institute and School of Economics and Finance, Faculty of Business and Economics
Tel: 2219 4967
Email: zhiwu.chen@hku.hk