The dominance of neoliberalism is turning societies against income equality.
At least, that’s according to a study published Tuesday in Perspectives on Psychological Science. A team of researchers at New York University and the American University of Beirut performed an analysis of roughly 20 years of data on from more than 160 countries and found that the dominance of neoliberalism across social and economic institutions has ingrained a widespread acceptance of income inequality across our value systems in turn.
“Our institutions, policies, and laws not only structure our social life, but also have a great influence on the kind of people and society we become,” Shahrzad Goudarzi, PhD Candidate at NYU and lead author on the paper said in a press release.
Goudarzi and her team set out to prove whether conservative British prime minister Margaret Thatcher’s 1981 proclamation that economic and political systems can shape “the heart and soul” is indeed true. They defined neoliberalism as the “dominant socioeconomic approach” and the root of “privatization, abolition of the welfare state, and curtailment of redistributive programs,” which has dominated from the 1970s to present day. They measured the strength of a nation’s neoliberalism using the Economic Freedom Index, a metric crafted by the Fraser Institute—a Canadian libertarian think tank—which measures items like “size of government,” “regulation of business, credit and labor” and “freedom to trade internationally.”
They evaluated psychological attitudes toward inequality using results from the World Values Survey, taken roughly every four years, which asked respondents globally direct questions about their agreement with statements like, “we need larger income differences as incentives for individual effort,” and “incomes should be made more equal.”
Their analysis found a correlation between the embrace of neoliberalism and the prominence of what social psychology scholars call “equity-based reasoning,” or a preference for merit over a preference for equality: the line of thinking in which material outcomes, like payment, wealth, and social status, should be proportional to inputs, like productivity, effort, ability and time. In short, the dominance of neoliberalism has promoted the belief that the wealthy have earned their spot in society just as much as the poor have.
“Institutions can promote well-being and solidarity, or they can encourage competition, individualism, and hierarchy,” Goudarzi said. “In our work, we find that neoliberalism has fostered preference for greater income inequality not just in industrialized nations, but throughout the world.”
The researchers find that political systems definitively shape beliefs, and within a period of four years—but they neglected to find a correlation in the other direction, that widespread beliefs have the power to change systems within the same period of time.
“If individuals’ distributive beliefs shape intuitions at all, such a process may require more than a few years to play out,” the paper reads.
“While it is perhaps intuitive that human beings shape the nature of the economies in which they live, our work shows the reverse—that economic systems mold human psychology to fit them,” Goudarzi said in the release. “Neoliberal, free-market reforms appear to increase people’s preference for high levels of income inequality.”
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