Endogenous Indoctrination: Occupational Choices, the Evolution of Beliefs and the Political Economy of Reforms*

Authors


  • *

     This article was prepared for the Economic Journal lecture given at the Royal Economic Society congress, University of Surrey, April 22 2009. I am grateful to John Vickers, John Driffill, Jean-Pierre Florens, Andrew Scott, an anonymous referee and participants to the AFSE meeting, the Namur workshop on political economy and the Royal Economic Society meeting for helpful comments and suggestions.

Abstract

I analyse a model where workers self-select in the educational occupation in a way which is correlated with their beliefs about the working of the market economy. Teachers have a disproportionate effect on the transmission of beliefs. Therefore, they generate a bias which makes it harder for the population to learn the true parameters of the economy if these are favourable to the market economy. Two parameters determine this bias. 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 make it easier to learn that the market economy is “good”, under the assumption that it is.

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