How The Economic Equality Mindset Holds Back The Economy

Posted on December 13, 2013
Filed Under Economics |

There is a great Ted talk about Grit, given by Angela Duckworth but based on initial research by Carol Dweck. The “meta” takeaway from Dweck’s research is that mindset matters. The way people think about something affects how they act. Dweck proved this by showing that students who believe success is based on hard work do much better when challenged than students who believe success is based on intelligence.

I was thinking about Dweck’s research this week when I read this infographic about the view of Inc 5000 entrepreneurs think about the economy. Spoiler alert: They tend to lean right, not left. Sixty three percent of them voted for Mitt Romney. Ten percent consider themselves politically liberal. Seventeen percent are registered Democrats.

It made me wonder… why, in a world where the government constantly speaks about the importance of entrepreneurship, how we need more entrepreneurs, and how they make up the backbone of our economic growth, why do we praise these entrepreneurs so much but then pass off their economic and political views as old fashioned rubbish? Why do we, as a society, think much more highly of the economic ideas of someone with no relevant experience (a populist like Elizabeth Warren for example) instead of listening to the ideas of the very people who are in the trenches and we claim are the lifeblood of our economic growth?

I wonder if these two ideas are tied together. I wonder if entrepreneurs are like the students who have grit. I wonder if holding the belief that the economy is a meritocracy actually promotes economic growth by encouraging people to go out and start companies. I wonder if the opposite mindset, the idea that you’ve worked hard and are owed something, but big companies and rich people have ripped you off, is the kind of mindset that could hold you back.

We know mindset affects expectations of performance. We know expectations of performance affect economic decisions. Maybe our economic problems are just as psychological as they are structural.

Comments

One Response to “How The Economic Equality Mindset Holds Back The Economy”

  1. nick huhn on December 18th, 2013 8:26 pm

    One of my least favorite words in the English language is “deserve.”

    To your point, the opposite of “deserve” is the word “earn” and I find many simply don’t want to ‘earn’ things because they ‘deserve’ them. So I agree that this mindset holds back individuals and consequently societies. Perhaps the solution is to unlearn the idea of ‘deserving’ anything other than fundamental human rights and opportunities to pursue - and earn - something greater.

    Happy Christmahanakwanzakah to you and your family, Rob.

  • About Rob

    Rob is co-founder of Backupify.com. He likes value investing, the Rolling Stones, college basketball, artificial intelligence, economic history and people who think independently.