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Endogenous Indoctrination: Occupational Choice, the Evolution of Beliefs, and the Political Economy of Reform

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  • Saint-Paul, Gilles

Abstract

Much of the political economy analysis of reform focuses on the conflict of interest between groups that stand to gain or lose from the competing policy proposals. In reality, there is also a lot of disagreement about the working of the policy: in addition to conflicting interests, conflicting views play an important role. Those views are shaped in part by an educational bureaucracy. It is documented that the beliefs of that bureaucracy differ substantially from those of the broader constituency. I analyse a model where this effect originates in the self-selection of workers in the educational occupation, and is partly reinforced by the insulation of the educational profession from the real economy (an effect which had been discussed by Hayek). The bias makes it harder for the population to learn the true parameters of the economy if these are favourable to the market economy. Two parameters that govern this capacity to learn are social entropy and heritability. Social entropy defines how predictable one's occupation is as a function of one's beliefs. Heritability is the weight of the family's beliefs in the determination of the priors of a new generation. Both heritability and social entropy reduce the bias and makes it easier to learn that the market economy is "good", under the assumption that it is. Finally I argue that the capacity to learn from experience is itself affected by economic institutions. A society which does not trust markets is more likely to favour labour market rigidities that in turn reduces the exposure of individuals to the market economy, and thus their ability to learn from experience. This in turn reinforces the weight of the educational system in the formation of beliefs, thus validating the initial presumption against the market economy. This sustains an equilibrium where beliefs and institutions reinforce each other in slowing or preventing people from learning the correct underlying parameters.

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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 09-033.

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Date of creation: May 2009
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Publication status: Published in The Economic Journal, vol.�120, n°544, mai 2010, p.�325-353.
Handle: RePEc:tse:wpaper:21949

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  1. Alberto Alesina & Eliana La Ferrara, 2001. "Preferences for Redistribution in the Land of Opportunities," NBER Working Papers 8267, National Bureau of Economic Research, Inc.
  2. Roland Benabou & Efe A. Ok, 1998. "Social Mobility and the Demand for Redistribution: The POUM Hypothesis," NBER Working Papers 6795, National Bureau of Economic Research, Inc.
  3. La Ferrara, Eliana & Alesina, Alberto, 2005. "Preferences for Redistribution in the Land of Opportunities," Scholarly Articles 4552533, Harvard University Department of Economics.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Policy inertia through educational elites
    by Economic Logician in Economic Logic on 2009-11-24 15:43:00
  2. The (changing?) role of the intellectuals
    by Pedro S. Martins in The Portuguese Economy on 2011-04-25 22:28:00
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Cited by:
  1. repec:rdg:wpaper:em-dp2011-02 is not listed on IDEAS
  2. Fuchs-Schündeln, Nicola & Masella, Paolo, 2013. "Long-Lasting Effects of Socialist Education," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79865, Verein für Socialpolitik / German Economic Association.
  3. Vranceanu, Radu & Barthélémy, Jérôme, 2011. "Knowledge in economics and economic reform : An analysis of French survey data," ESSEC Working Papers WP1103, ESSEC Research Center, ESSEC Business School.
  4. Tilman Klumpp & Xuejuan Su, 2013. "A theory of perceived discrimination," Economic Theory, Springer, vol. 53(1), pages 153-180, May.
  5. Franck, Raphaël & Johnson, Noel D. & Nye, John V.C., 2014. "From internal taxes to national regulation: Evidence from a French wine tax reform at the turn of the twentieth century," Explorations in Economic History, Elsevier, vol. 51(C), pages 77-93.
  6. Friedrich Heinemann & Theocharis Grigoriadis, 2013. "Origins of Reform Resistance and the Southern European Regime," WWWforEurope Working Papers series 20, WWWforEurope.

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