They believe in elves.
Yes, you read that right. And not only elves but also trolls, gnomes, and other hidden creatures. When a rainbow appears in the sky, you can hear an Icelander say that the elves turned it on. A former member of Parliament even assured that a family of elves had saved his life in a car accident! Even the construction of a road can be rejected if it goes through an area where hidden creatures supposedly live. Progress in Iceland goes hand in hand with supernatural powers.