The relationship among cultural dimensions, education expenditure, and PISA performance

• Power distance and masculinity have a negative impact on public education expenditure, while individualism and long-term orientation positively impact public expenditure on education.
• Public expenditure on education and PISA scores are positively associated at the country level.

We examine the channel relationship between cultural dimensions, public expenditure on education, and country level PISA test scores. We test the hypotheses that cultural dimensions impact aggregate public expenditure on education and higher expenditure improves PISA results. We find a causal relationship between measures of culture and expenditure on education. In particular, we document the negative impact of power distance and masculinity on education expenditure. In contrast, individualism and long-term orientation positively impact public expenditure. In addition, we find a strong positive association between public expenditure on education and PISA scores at the country level. These findings are robust and consistent for all PISA test types. Our research findings shed light on the important role of cultural dimensions on education expenditure and inter-country differences in PISA performance.