| Cognitive Dissonance
Regarding cognitive dissonance, Wikipedia says:
The most famous case in the early study of cognitive dissonance was described by Leon Festinger and others in the book When Prophecy Fails.[3] The authors infiltrated a group that was expecting the imminent end of the world on a certain date. When that prediction failed, the movement did not disintegrate, but grew instead. By sharing cult beliefs with others, they gained acceptance and thus reduced their own dissonance (see further discussion below).
Another famous example of cognitive dissonance is the Ben Franklin effect. Franklin (1996: p. 80) won over a political opponent by asking him a favor and he relates thus:
I did not ... aim at gaining his favour by paying any servile respect to him but, after some time, took this other method. Having heard that he had in his library a certain very scarce and curious book, I wrote a note to him, expressing my desire of perusing that book, and requesting he would do me the favour of lending it to me for a few days. He sent it immediately, and I return'd it in about a week with another note, expressing strongly my sense of the favour. When we next met in the House, he spoke to me (which he had never done before), and with great civility; and he ever after manifested a readiness to serve me on all occasions, so that we became great friends, and our friendship continued to his death. This is another instance of the truth of an old maxim I had learned, which says, "He that has once done you a kindness will be more ready to do you another, than he whom you yourself have obliged."[4]
This perception of Franklin has led to what has become known as the Ben Franklin effect. After lending Franklin the book, the opponent had to resolve the dissonance of his attitude towards Franklin, whom he also had just done a favor. He justified doing the favor by telling himself that he actually liked Franklin, and, as a result, he treated him with respect instead of rudeness from then on.
Among other things, this passage illustrates the range of cognitive dissonance from outlandish to subtle, and shows that it's anything but a novel or outlandish notion. It's also well worth looking Wikipedia's entry on When Prophecy Fails. (I wanted to quote from it, but then I didn't know where to stop.) One more thing I'd like to say, though: cognitive dissonance seems to be very much involved with people's basic self-concept. Ideas that somehow get embedded in one's self-concept are much more difficult to seriously reconsider. In some experimental cases it came down to seemingly minor examples of choosing one product over another (people routinely become more attached to their choice afterward), because this reflects on their sense of themselves as smart, intelligent, decisive, etc.
Cognitive Dissonance In Economics
The seminal paper bringing cognitive dissonance into economics was "The Economic Consequences of Cognitive Dissonance", by George A. Akerlof and William T. Dickens, written in 1982. (Not available online, but from the JSTOR database available in some libraries.) Here are some excerpts:
We think the theory of cognitive dissonance can be fairly represented in economists' terms in three propositions: First, persons not only have preferences over states of the world, but also over their beliefs about the state of the world. Second, persons have some control over their beliefs; not only are people able to exercise some choice about belief given avail-able information, they can also manipulate their own beliefs by selecting sources of in-formation likely to confirm "desired" beliefs. Third, it is of practical importance for the application of our theory that beliefs once chosen persist over time.2
The primary example they explore is that of workers in a hazardous industry, first when no safety equipment is available, then when it does become available:
In the first period, workers in the hazard-ous industry have no choice but to face the possibility of an accident as there is no safety equipment available. If the cost imposed by future wrong decisions is not too great, workers in the hazardous industry will, be-cause of cognitive dissonance, come to be-lieve that the job is really safe.
In the second period, cost-effective safety equipment becomes available. But, because by then workers in the hazardous industry believe the jobs to be safe, they will not purchase the equipment. Safety legislation is needed to restore Pareto optimality since the workers have an incorrect assessment of the marginal rate of substitution between safety equipment and money income.5
In this model, both labor markets and product markets are competitive. Also, workers begin with rational expectations. These workers know upon taking a job in the hazardous industry that they will experience cognitive dissonance and alter their esti-mated probabilities of accident. The purpose of building such a "complete information" model is not realism; we would not expect people to be aware of their future behavior.6 Rather, the purpose of this assumption is to show that even in a model where workers entering a hazardous job perfectly foresee their future psychological reactions to the unsafe conditions, there may be a welfare-improving role for safety legislation. Such a role is obvious in models without rational expectations in which governments have more information than private agents.
They go on to discuss this in terms that involve standard sorts of economic models, which need not concern us here, except to note that the models are standard sorts of economic models, only the basis on which they are constructed--sketched out above--is at all unusual.
Building on the background that began with this paper, Kessler writes:
At least since the work of Akerlof and Dickens (1982) CD has been employed by economists to study both conventional and unconventional economic topics.4 Akerlof and Dickens themselves apply it to a labor market "anomaly," namely the pervasive breaking of workplace safety standards by workers in risky occupations. Of course Akerlof and Dickens and subsequent writers employ CD to examine the behavior of the usual "agents" who are the subjects of study by economists: consumers, workers, entrepreneurs, investors (and more recently, voters, bureaucrats and politicians), whereas I intend to apply it to economists. But I justify this by an appeal to authority: In his presidential address to the Western Economics Association, Milton Friedman (1986) said about economists, "[w]e cannot in good conscience interpret ourselves as behaving differently from those we analyze. We cannot treat ourselves as an exception."5 (p.8)
Thus, his analysis in this paper may be unusual, but it's in no way any sort of a stretch. Indeed, Kessler quotes a passage from Krugman's blog that unmistakeably invokes the underpinings of cognitive dissonance and its grounding in beliefs tied to self-concept:
In response to attacks on him following his devastating assault on the "modern macro" wing of the BLF he [Krugman] writes about them as follows: "They're smart! They work hard, using hard math! How dare I say such a thing!"12 I conclude, in other words, that the ideology embraced by the BLF has become a component of their self-concept, in part at least due to the hard work required to enter the group. They will react to any threat to their core beliefs represented by events in "the real world" by means of "distortion and denial." Given the above, I consider irrational, ill-considered, clearly erroneous responses by the BLF to the current crisis as symptoms of cognitive dissonance.
And so the stage is set for testing the hypothesis, which requires the clear demonstration that blaming the CRA for the housing crisis is false.
Evidence That Blaming The CRA Has No Merit
First off, Kessler presents the CRA-blaming narrative:
An often-repeated narrative laying out the CRA-crisis link goes something like this: At the time of its passage the CRA's requirements were vague and difficult to enforce. With the arrival of the Clinton administration enforcement was strengthened and the law itself was amended in 1995 and "given teeth." As a result, banks were forced by regulators to weaken their lending standards and to extend mortgage credit to unqualified borrowers-hence the rapid expansion of the so-called "sub-prime" mortgage market between 2002 and 2006. Unsurprisingly, especially because of the slowdown in housing price increases and subsequent price declines in 2006 and 2007, sub-prime borrowers were unable to meet their obligations, hence the explosion of defaults and foreclosures in 2007 and 2008.
The facts refuting this narrative are fairly straight-forward:
The following points are based mostly on a study by Federal Reserve staff (which to my knowledge has not been refuted by any scholar or other expert.) [See Board of Governors of the Federal Reserve System (2008)] - Approximately 60 percent of "high-priced" (i.e., subprime and Alt-A) mortgage loans were made to middle-income and high-income borrowers or in middle- and high-income neighborhoods whose populations are not the targets of the CRA legislation.22
- More than 20 percent of high-priced loans made to low- and moderate-income borrowers or to borrowers in middle- and high-income neighborhoods were extended by nonbank institutions unaffiliated with depository institutions covered by the CRA.
- Approximately 17 percent of subprime and Alt-A loans to low-income borrowers were extended by institutions that fall under the CRA umbrella but were made in areas
- outside
these institutions' "assessment areas" and thus did not contribute to their CRA performance evaluations.
- Only 6 percent of high-priced loans to low-income borrowers or in low-income neighborhoods by lending institutions that fall under the CRA legislation were made in their CRA assessments areas. (Board of Governors of the Federal Reserve System, p. 3)
As Kroszner says about the last point, "[t]his result undermines the assertion by critics of the potential role for the CRA in the subprime crisis. In other words, the very small share of all high-priced loan originations that can be reasonably attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis."
This is not a complicated argument. An economics undergrad who failed to follow it should not reasonably become an economics graduate. And yet, such lucid evidence to the contrary is ignored or denied by those who claim the CRA was to blame.
So what did Kessler find?
Blaming The CRA
In April 2010. Kessler explains, he conducted an e-mail survey of two groups of economists, who were "asked about their views on the causes of the global economic and financial crisis." He explains:
Group A consisted of the signers of an open letter sponsored by the Cato Institute and published in the New York Times and other major newspapers in the United States opposing President Obama's stimulus bill (ARRA).23 The letter was signed by 256 economists, including at least one Bank of Sweden Nobel memorial prize winner. In the following weeks additional individuals signed the letter bringing the total to 335. It is clear, based on the contents of the letter and the character of the sponsor that the signers are self-proclaimed BLFs.24 (The list of signers almost overlaps the list of economists who signed a newspaper advertisement supporting Senator McCain's economic policies over Obama's in the 2008 presidential election; only 40 individuals who were on the McCain list did not sign the Cato letter.) Group B consisted of a random sample of 1,527 members (i.e., approximately 10%) of the American Economics Association. There were 10 questions concerning factors that might have caused the crisis (which are given in the appendix). I chose the items based on views widely expressed both by economists and non-economists in the past two years on the possible causes of the crisis. For each factor respondents were asked what effect they thought it had on the crisis expressed on a scale from 1 to 10 (with 1 representing no impact and 10 representing a major impact).
They were also asked to identify the top three factors.
The results are generally what one would expect when comparing a group of BLF economists to a randomly selected group of "other" economists. Note that the null hypothesis (no statistically significant difference between the responses of the two groups) is rejected at the 0.0001 level for almost all the items. The null hypothesis is accepted for item 6 ("Borrowing by households beyond their capacity to repay was a major cause of the financial crisis of 2007-2009."), i.e., the views of the two groups on this question are almost identical and for the "top 3 contributors" part of item 10.
However, that was the exception. The two groups were clearly differentiated in almost every regard, including regarding the CRA as a major cause. Indeed, 46% of CATO letter signers ranked the CRA cause in the top 3, compared to just 12% of economists as a whole. Given how transparently false this is, cognitive dissonance is clearly implicated.
Cognitive Dissonance At Large
It's quite remarkable that cognitive dissonance can so readily and clearly be demonstrated among such a large body of economists. This remarkable fact makes it all the more sensible to look for cognitive dissonance more widely at work in shaping political policy views. It also makes it more sensible to look for certain patterns of behavior. Because cognitive dissonance is linked to self-concept, it makes sense to consider the full range of ego-defense mechanisms--not just denial--as potential forms of response. I've written about these mechanisms before, at quite some length, for example, in "The Ontology of Snark: A Prelude" It's sufficient here just to note that defense mechanisms have been ranked according to a hierarchy that runs from primitive/pathological to mature, and that the two most primitive levels include the following (from Wikipedia):
Level 1 - Pathological
The mechanisms on this level, when predominating, almost always are severely pathological. These four defences, in conjunction, permit one to effectively rearrange external experiences to eliminate the need to cope with reality. The pathological users of these mechanisms frequently appear irrational or insane to others. These are the "psychotic" defences, common in overt psychosis. However, they are found in dreams and throughout childhood as well.
They include:
- Delusional Projection: Grossly frank delusions about external reality, usually of a persecutory nature.
- Denial: Refusal to accept external reality because it is too threatening; arguing against an anxiety-provoking stimulus by stating it doesn't exist; resolution of emotional conflict and reduction of anxiety by refusing to perceive or consciously acknowledge the more unpleasant aspects of external reality.
- Distortion: A gross reshaping of external reality to meet internal needs.
- Splitting: A primitive defence. Negative and positive impulses are split off and unintegrated. Fundamental example: An individual views other people as either innately good or innately evil, rather than a whole continuous being.
- Extreme projection: The blatant denial of a moral or psychological deficiency, which is perceived as a deficiency in another individual or group.
Level 2 - Immature
These mechanisms are often present in adults and more commonly present in adolescents. These mechanisms lessen distress and anxiety provoked by threatening people or by uncomfortable reality. People who excessively use such defences are seen as socially undesirable in that they are immature, difficult to deal with and seriously out of touch with reality. These are the so-called "immature" defences and overuse almost always leads to serious problems in a person's ability to cope effectively. These defences are often seen in severe depression and personality disorders. In adolescence, the occurrence of all of these defences is normal.
They include:
- Acting out: Direct expression of an unconscious wish or impulse in action, without conscious awareness of the emotion that drives that expressive behavior.
- Fantasy: Tendency to retreat into fantasy in order to resolve inner and outer conflicts.
- Idealization: Unconsciously choosing to perceive another individual as having more positive qualities than he or she may actually have.[14]
- Passive aggression: Aggression towards others expressed indirectly or passively such as using procrastination.
- Projection: Projection is a primitive form of paranoia. Projection also reduces anxiety by allowing the expression of the undesirable impulses or desires without becoming consciously aware of them; attributing one's own unacknowledged unacceptable/unwanted thoughts and emotions to another; includes severe prejudice, severe jealousy, hyper vigilance to external danger, and "injustice collecting". It is shifting one's unacceptable thoughts, feelings and impulses within oneself onto someone else, such that those same thoughts, feelings, beliefs and motivations are perceived as being possessed by the other.
- Projective identification: The object of projection invokes in that person precisely the thoughts, feelings or behaviors projected.
- Somatization: The transformation of negative feelings towards others into negative feelings toward self, pain, illness, and anxiety.
(I would actually question the inclusion of projective identification in this list, since projective identification first appears before ego-formation, and indeed plays a role in shaping ego- development. But that's a matter for another time.)
As we see the Tea Baggers and other manifestations of movement conservatism embrace various big lies, such as the "liberal fascism" meme, Glenn Beck's fantasy that middle-aged conservative white men started the Civil Rights Movement, etc. we can clearly see that various different types of ego-defense mechanisms listed above are playing a part. Cognitive dissonance theory provides a way to make sense of how and why these sorts of mechanisms come into play, and Kessler's paper suggests that there are ways to identify claims that can rationally related to these mechanisms.
In turn, this points the way toward developing a much more realistic view of how people perceive the political world, and better understanding how significantly their actions diverge from simplistic idealized conceptions that tend to hold so much sway and so commonly lead us significantly astray. |
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