IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v188y2021icp1059-1087.html
   My bibliography  Save this article

The role of beliefs in supporting economic policies: The case of the minimum wage

Author

Listed:
  • Mishagina, Natalia
  • Montmarquette, Claude

Abstract

Using a sizeable online experiment on a proposed policy to raise the minimum wage in Quebec, we show that support for the policy is consistent with participants’ self-interest and social preferences and, most importantly, with their beliefs about the policy's outcomes. This finding is significant because, unlike policy-invariant sociodemographic characteristics, beliefs can be modified. We then show that beliefs about the outcomes vary with participants’ knowledge about the minimum wage, numeracy, and economic literacy. We also show how participants without a good knowledge of facts about the minimum wage (its actual level, its relation with the average wage, and the proportion of workers earning the minimum wage), change their opinion after having been informed with the correct information.

Suggested Citation

  • Mishagina, Natalia & Montmarquette, Claude, 2021. "The role of beliefs in supporting economic policies: The case of the minimum wage," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1059-1087.
    • Handle: RePEc:eee:jeborg:v:188:y:2021:i:c:p:1059-1087
    DOI: 10.1016/j.jebo.2021.06.028
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268121002675
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2021.06.028?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ernesto Dal Bó & Pedro Dal Bó & Erik Eyster, 2018. "The Demand for Bad Policy when Voters Underappreciate Equilibrium Effects," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 964-998.
    2. Roth, Christopher & Settele, Sonja & Wohlfart, Johannes, 2022. "Beliefs about public debt and the demand for government spending," Journal of Econometrics, Elsevier, vol. 231(1), pages 165-187.
    3. Tullio Jappelli, 2010. "Economic Literacy: An International Comparison," Economic Journal, Royal Economic Society, vol. 120(548), pages 429-451, November.
    4. Daniel Aaronson & Eric French & Isaac Sorkin & Ted To, 2018. "Industry Dynamics And The Minimum Wage: A Putty†Clay Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(1), pages 51-84, February.
    5. David Romer, 2003. "Misconceptions and Political Outcomes," Economic Journal, Royal Economic Society, vol. 113(484), pages 1-20, January.
    6. repec:pri:cepsud:99blinderkrueger is not listed on IDEAS
    7. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, vol. 6(3), pages 347-369, May.
    8. repec:iza:izawol:journl:y:2014:p:6 is not listed on IDEAS
    9. Lordan, Grace & Neumark, David, 2018. "People versus machines: The impact of minimum wages on automatable jobs," Labour Economics, Elsevier, vol. 52(C), pages 40-53.
    10. McFadden, Daniel, 1999. "Rationality for Economists?," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 73-105, December.
    11. Olken, Benjamin A., 2009. "Corruption perceptions vs. corruption reality," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 950-964, August.
    12. Author-Name: Alan S. Blinder & Alan B. Krueger, 2004. "What Does the Public Know about Economic Policy, and How Does It Know It?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 327-397.
    13. Cruces, Guillermo & Perez-Truglia, Ricardo & Tetaz, Martin, 2013. "Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 100-112.
    14. Alan Blinder & Alan Krueger, 2004. "What Does the Public Know about Economic Policy, and How Does It Know It?," Working Papers 875, Princeton University, Department of Economics, Industrial Relations Section..
    15. Roland Bénabou & Jean Tirole, 2016. "Mindful Economics: The Production, Consumption, and Value of Beliefs," Journal of Economic Perspectives, American Economic Association, vol. 30(3), pages 141-164, Summer.
    16. Fong, Christina, 2001. "Social preferences, self-interest, and the demand for redistribution," Journal of Public Economics, Elsevier, vol. 82(2), pages 225-246, November.
    17. Author-Name: Alan S. Blinder & Alan B. Krueger, 2004. "What Does the Public Know about Economic Policy, and How Does It Know It?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 327-397.
    18. Thomas MaCurdy, 2015. "How Effective Is the Minimum Wage at Supporting the Poor?," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 497-545.
    19. Ingar Haaland & Christopher Roth, 2023. "Beliefs about Racial Discrimination and Support for Pro-Black Policies," The Review of Economics and Statistics, MIT Press, vol. 105(1), pages 40-53, January.
    20. David Neumark, 2018. "Employment effects of minimum wages," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-6, December.
    21. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
    22. Lionel Page & Daniel G. Goldstein, 2016. "Subjective beliefs about the income distribution and preferences for redistribution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(1), pages 25-61, June.
    23. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-649, May.
    24. Bryan Caplan, 2007. "Introduction to The Myth of the Rational Voter: Why Democracies Choose Bad Policies," Introductory Chapters, in: The Myth of the Rational Voter: Why Democracies Choose Bad Policies, Princeton University Press.
    25. Lordan, Grace & Neumark, David, 2017. "People versus machines: the impact of minimum wages on automatable," LSE Research Online Documents on Economics 84060, London School of Economics and Political Science, LSE Library.
    26. Dany Brouillette & Calista Cheung & Daniel Gao & Olivier Gervais, 2017. "The Impacts of Minimum Wage Increases on the Canadian Economy," Staff Analytical Notes 17-26, Bank of Canada.
    27. Robert Jensen, 2010. "The (Perceived) Returns to Education and the Demand for Schooling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(2), pages 515-548.
    28. Daniel MacDonald & Eric Nilsson, 2016. "The Effects of Increasing the Minimum Wage on Prices: Analyzing the Incidence of Policy Design and Context," Upjohn Working Papers 16-260, W.E. Upjohn Institute for Employment Research.
    29. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lennon, Conor & Teltser, Keith F. & Fernandez, Jose & Gohmann, Stephan, 2023. "How morality and efficiency shape public support for minimum wages," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 618-637.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Natalia Mishagina & Claude Montmarquette, 2018. "The Demand for Economic Policies, Beliefs, and Willingness-to-Pay: The Case of the Minimum Wage Policy in Quebec," CIRANO Project Reports 2018rp-14, CIRANO.
    2. Lergetporer, Philipp & Woessmann, Ludger, 2023. "Earnings information and public preferences for university tuition: Evidence from representative experiments," Journal of Public Economics, Elsevier, vol. 226(C).
    3. Katharina Werner, 2019. "The Role of Information for Public Preferences on Education – Evidence from Representative Survey Experiments," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 82.
    4. Cruces, Guillermo & Perez-Truglia, Ricardo & Tetaz, Martin, 2013. "Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 100-112.
    5. Lergetporer, P & Woessmann, L, 2022. "Income Contingency and the Electorates Support for Tuition," CAGE Online Working Paper Series 606, Competitive Advantage in the Global Economy (CAGE).
    6. Simon, Lisa & Piopiunik, Marc & Lergetporer, Philipp, 2017. "Information, perceived education level, and attitudes toward refugees: Evidence from a randomized survey experiment," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168280, Verein für Socialpolitik / German Economic Association.
    7. Ernesto Dal Bó & Pedro Dal Bó & Erik Eyster, 2018. "The Demand for Bad Policy when Voters Underappreciate Equilibrium Effects," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 964-998.
    8. Philipp Lergetporer & Guido Schwerdt & Katharina Werner & Ludger Woessmann, 2016. "Information and Preferences for Public Spending: Evidence from Representative Survey Experiments," CESifo Working Paper Series 5938, CESifo.
    9. Kakkar, Shrey, 2021. "Significant movements in the debate on the Minimum Wage (1994 - 2019)," MPRA Paper 110185, University Library of Munich, Germany.
    10. Klor, Esteban F. & Shayo, Moses, 2010. "Social identity and preferences over redistribution," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 269-278, April.
    11. Maurizio Bussolo & Ada Ferrer‐i‐Carbonell & Anna Giolbas & Iván Torre, 2021. "I Perceive Therefore I Demand: The Formation of Inequality Perceptions and Demand for Redistribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(4), pages 835-871, December.
    12. Jeffrey, Karen, 2021. "Automation and the future of work: How rhetoric shapes the response in policy preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 417-433.
    13. Lisa Simon, 2019. "Microeconometric Analyses on Determinants of Individual Labour Market Outcomes," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 83.
    14. Francesco Capozza & Ingar Haaland & Christopher Roth & Johannes Wohlfart, 2021. "Studying Information Acquisition in the Field: A Practical Guide and Review," CEBI working paper series 21-15, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    15. Lergetporer, Philipp & Schwerdt, Guido & Werner, Katharina & West, Martin R. & Woessmann, Ludger, 2018. "How information affects support for education spending: Evidence from survey experiments in Germany and the United States," Journal of Public Economics, Elsevier, vol. 167(C), pages 138-157.
    16. Larsen, Vegard H. & Thorsrud, Leif Anders & Zhulanova, Julia, 2021. "News-driven inflation expectations and information rigidities," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 507-520.
    17. Lergetporer, Philipp & Piopiunik, Marc & Simon, Lisa, 2021. "Does the education level of refugees affect natives’ attitudes?," European Economic Review, Elsevier, vol. 134(C).
    18. Daniel Levy & Avichai Snir, 2022. "Potterian economics," Oxford Open Economics, Oxford University Press, vol. 1, pages 1-32.
    19. Assenza, Tiziana, 2021. "The Ability to 'Distill the Truth'," TSE Working Papers 21-1280, Toulouse School of Economics (TSE), revised Mar 2022.
    20. Henning Hermes & Philipp Lergetporer & Fabian Mierisch & Guido Schwerdt & Simon Wiederhold, 2024. "Does Information about Inequality and Discrimination in Early Child Care Affect Policy Preferences?," CESifo Working Paper Series 10925, CESifo.

    More about this item

    Keywords

    Minimum wage policy; Beliefs; Economic experiments;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • H89 - Public Economics - - Miscellaneous Issues - - - Other
    • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:188:y:2021:i:c:p:1059-1087. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.