NICEP Seminar: Jean-Paul Carvalho (Oxford University)

Title: Zero-sum thinking, the evolution of effort-suppressing beliefs and economic development

Abstract:  We study the evolution of belief systems that suppress productive effort. These include concerns about the envy of others, beliefs in the importance of luck for success, disdain for competitive effort, and traditional supernatural beliefs in witchcraft or the evil eye. We show that such demotivating beliefs evolve when interactions are zero-sum in nature, i.e., the gains for one individual tend to come at the expense of another. Within a population, our model predicts a divergence between material and subjective payoffs, with material welfare being hump-shaped and subjective well-being being strictly decreasing in demotivating beliefs. Across societies, our model predicts a positive relationship between zero-sum thinking and demotivating beliefs) and a negative relationship between zero-sum thinking (or demotivating beliefs and both material welfare and subjective well-being.  We test the predictions of the model using data from two samples in the Democratic Republic of Congo and from the World Values Survey. In the DRC, we find a positive relationship between zero-sum thinking and the presence of demotivating beliefs, such as concerns about envy and beliefs in witchcraft. Globally, zero sum thinking is associated with scepticism about the importance of hard work for success, lower income, less educational attainment, less financial security, and lower life satisfaction. Comparing individuals in the same zero-sum environment, we observe the divergence between material outcomes and subjective well-being predicted by our model.