I believe is used to just describe your empire to other human players, not real advantage or disadvantage. Happiness type, on the other hand, does affect game play.
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Technological advancement is like an axe in the hands of a pathological criminal. --A. Einstein
It does have some sort of effect on how the AI regards you. I've had very different relations with various races when I chose different demeanors. The XiChung, for example, spent an entire game offering me treaties and refused to go to war even though I bLasted their ships ANY time they came into my systems, but in another game they declared war almost as soon as they met me.