Belief in a Just World and Redistributive Politics

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Belief in a Just World and Redistributive Politics
Roland Benabou and Jean Tirole
published in Quarterly Journal of Economics, 2006

November 28, 2011

Introduction

International surveys reveal striking differences between the views held in different countries concerning: the causes of wealth and poverty; the extent to which individuals are responsible for their own fate; the long-run rewards to personal effort.

Why does the prevalence of the belief in a just world vary considerably across countries? What are the implications for redistributive policies and the stigma borne by the poor.

Introduction

Because of imperfect willpower, people continuously strive to motivate themselves (or their children) toward effort. In such circumstances, maintaining somewhat rosy beliefs about the fact that everyone will ultimately get their “just desserts” can be very valuable. If enough people end up with the view that economic success is highly dependent on effort, they will represent a pivotal voting bloc and set a low tax rate. Conversely, when people anticipate little redistribution, the value of a proper motivation is much higher; everyone thus has greater incentives to believe in self-sufficiency.

Introduction

Due to these complementarities between individuals’ ideological choices, there can be two equilibria. American equilibrium is characterized by a high prevalence of just-world beliefs and a relatively laissez-faire public policy. European equilibrium is characterized by more pessimism and a more extensive welfare state.

More generally, the paper proposes a mechanism for the emergence and persistence of collective beliefs and ideologies.

Self-reliance and redistribution: importance of beliefs
The extent of direct and indirect redistribution – through taxes and transfers, social insurance, education finance, and labor market regulation – differs remarkably across advanced democracies. Considerable evidence suggests that citizens’ beliefs about the causes of wealth and poverty. Only 29% of Americans believe that the poor are trapped in poverty and only 30% believe that luck, rather than effort or education, determines income. The figures for Europeans are 60% and 54%, respectively. There is a strong correlation between beliefs and the levels of redistributions.

Self-reliance and redistribution: inaccuracy of beliefs

It should be noted that these popular perceptions are often distinctly at odds with reality. There is a significant discrepancy between the widespread view of the US as an exceptionally mobile society and the actual evidence on income mobility which shows no significant difference from European welfare states. Evidence also suggests that the hours worked by the bottom quintile are very comparable on both sides of the Atlantic. The paper hypothesizes that individuals’ beliefs are shaped by their own functional goals and psychological needs: people believe what they want to believe.

Self-reliance and redistribution: motivated beliefs

People obstinately hold on to a belief that effort, hard effort, good deeds will ultimately pay off: people get what they deserve and they deserve what they get. At the same time, they face daily reminders that the world is not always so just and constantly struggle with the resulting cognitive dissonance. People tend to preserve those beliefs by selective recall/awareness or parental indoctrination.

A model of ideology

The economy is populated by a continuum of agents i ∈ [0, 1]. There are two classes of agents: the (minority) advantaged and the (majority) disadvantaged, with ψ < 0.5 being the fraction of the advantaged. Each agent chooses the effort level e i . The output y i ∈ {0, 1} is given by prob(y i = 1 | e i ) = π i + θe i .

A model of ideology

Agents vote over a linear tax rate τ ≤ 1. The true extent to which effort is rewarded in the long term θ is unknown. Each agent observes a signal σ of the long-run return.

A model of ideology...
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