Common Good Institutions, Identity in the Workplace, and Value Dynamics

The theory of social choice stresses that the general interest determined through the aggregation of individual preferences implies interpersonal utility comparisons and hence necessarily a notion of common good beyond individual preferences. The pursuit of the common good falls to all services of the state and drives their individual decisions. Economic model of identity in the workplace predicts that outsider public sector workers may internalize the common good value to minimize cognitive dissonance. To test this hypothesis, I study the dynamics of preferences for workers in public versus private sector jobs. For identification, I use panel data and exploit within-individual variations, alleviating endogeneity concern related to selection into occupation. Further addressing the dynamic omitted variable concern, I find that switching into the public sector increases by one third the likelihood of exhibiting the common good value while having a negative effect on public trust and left-wing ideology. By contrast, switching into the private sector crowds out common good value. Examining causal mechanisms, I show that the public sector effect is most pronounced for workers with higher dissonance costs. Furthermore, I find that workers adopting the common good value in the workplace adopt a general behavior consistent with active participation in the public realm, pointing to value internalization. Overall, this paper provides empirical evidence of a rich and rapid, dynamic interaction between individual preferences and economic institutions.