Working Paper: CEPR ID: DP4952
Authors: Roland Bénabou; Jean Tirole
Abstract: International surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate. At the same time, social ethnographies and experiments by psychologists demonstrate individuals' recurrent struggle with cognitive dissonance as they seek to maintain, and pass on to their children, a view of the world where effort ultimately pays off and everyone gets their just deserts. This paper offers a model that helps explain: i) why most people feel such a need to believe in a ?just world?; ii) why this need, and therefore the prevalence of the belief, varies considerably across countries; iii) the implications of this phenomenon for international differences in political ideology, levels of redistribution, labour supply, aggregate income, and popular perceptions of the poor. The model shows in particular how complementarities arise endogenously between individuals' desired beliefs or ideological choices, resulting in two equilibria. A first, ?American? equilibrium is characterized by a high prevalence of just-world beliefs among the population and relatively laissez-faire policies. The other, ?European? equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state. More generally, the paper develops a theory of collective beliefs and motivated cognitions, including those concerning ?money? (consumption) and happiness, as well as religion.
Keywords: cognitive dissonance; ideology; inequality; memory; psychology; religion; self-control; social mobility; welfare state; willpower
JEL Codes: D31; D72; D80; E62; P16; Z12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Belief in a just world (BJW) (D63) | lower tax rates (H29) |
| Belief in a just world (BJW) (D63) | less support for redistribution (D39) |
| Lower belief in a just world (BJW) (D63) | higher tax rates (H29) |
| Lower belief in a just world (BJW) (D63) | stronger support for welfare policies (I38) |
| Belief in a just world (BJW) (D63) | attribution of economic success to personal effort (D29) |
| attribution of economic success to personal effort (P12) | political preferences regarding taxation and redistribution (H23) |
| Cognitive dissonance reduction mechanisms (D80) | maintenance of beliefs in a just world (BJW) (K40) |
| Different political contexts (American vs. European) (P16) | equilibria in BJW and redistribution (D63) |