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Musical preferences and gourmet meals may well give rise to amusing differences of opinion. There is no point in trying to unravel these as they are both questions of taste. But there are also phenomena that can be demonstrated scientifically and yet continue to be refuted as well as claims that are completely unfounded yet have many followers. This is very hard to explain and has led to some interesting microeconomics research. Joël van der Weele is an assistant professor at the Amsterdam School of Economics (ASE) and talks about his research into an area where economics meets psychology.

There are many social trends that are not founded in economics. Examples include former US President Donald Trump’s fake news statements, claims that corona vaccinations contain Bill Gates’s microchips and the fortunes told by crystal gazers. At the same time, they have a significant economic impact. 'Traditional economic models assume rational decision-making and can therefore not account for such beliefs,' van der Weele points out. He is very interested in the interface between psychology and economics.

“Motivated cognition” is a phenomenon that straddles the two disciplines and is a subject of many studies co-authored by the ASE lecturer. 'The general idea behind the concept is that people’s ideas, opinions and convictions are not just based on rational evidence such as the facts and affairs they observe. People also base them on what suits them best or what they would like to be true.' Van der Weele gives overconfidence as an example. 'Many people ‒ men in particular ‒ overestimate their abilities, something that can work to their advantage. Take an entrepreneur, for instance, who is convinced that he has a great idea. This makes it easier to persuade others and thus raise capital, whether or not it really is such a good idea.'

It appears that people who argue in favour of such propositions and those who argue against indeed become polarised even though their side of the debate is assigned randomly.

Demonstrated fact: manipulation of the self works

The fact that people try to fool themselves is also known as “self-deception”, a phenomenon that clearly serves a purpose. As illustrated above, it makes you more persuasive. Van der Weele adds: 'One of our lab experiments showed how people who knew beforehand that they would have to convince others they had performed well actually believed they had done so. They had already convinced themselves as it were, so that they in turn were better able to convince others.'

A similar study, but in a more natural setting, was conducted at international debating competitions. During these competitions, participants do not know the topic to be debated or the position they should take until just before the start. 'Our hypothesis was that people would believe more strongly in claims that agreed with the views they had to defend.' Suppose, for instance, that somebody has to argue the position that Europe should admit fewer immigrants. The expectation is that such a person will be more convinced of a higher crime rate among immigrants than somebody arguing the opposite position. 'Because this fits in with his or her viewpoint in the debate,' the ASE researcher goes on to say. It appears that people who argue in favour of such propositions and those who argue against indeed become polarised even though their side of the debate is assigned randomly. 'And they remain polarised after the debate has taken place and the competition is almost over.'

A similar effect can also be seen in the national and international political arenas. 'It is corroborated by the polarisation in the United States surrounding the election of Trump. He made entirely unfounded claims but his supporters also started to believe them because they had to convince others that what Trump said was actually true.'

Effect of price incentives

Another interesting issue Van der Weele is examining is the effect of price incentives on people’s identity and opinions and their outlook on the world. 'Researchers from Israel, for example, have looked at the relationship between food consumption patterns and religion in India. It seems that food prices affect people’s identity. When the price of pork rises, it becomes more attractive to be Muslim because Muslims don’t eat pork.' It is not that a person turns Muslim just because pork has risen in price but what you do see is that it makes Islam more attractive. As a result, Muslims identify more strongly with their religion and also reduce their consumption of alcohol.

So price incentives also affect people’s identity and interests. Van der Weele believes they can therefore be used as a solution to social challenges. 'Take a tax on meat, a topical social issue. Such a tax has the usual economic effect, namely that people will substitute away from the now more expensive meat. But when meat becomes less attractive, people might also stop turning a blind eye to the downsides of the meat industry and become more willing to accept new alternatives.' Psychology and economics are thus more intertwined than a first glance might suggest.