Moral psychology and economic policy

In recent years the discipline of moral psychology has generally been seen as separate to that of economics although historically (Adam Smith and Karl Marx) discussions of political economy* were closely linked with questions of morality.

* Political economy – looks at the interactions between individuals and society, as well as the dynamics between markets and the state. Uses tools and methodologies from economics, politics, and sociology

According to Benjamin Enke the growing link between moral psychology and economics offers government policy makers greater insight into the issues of inequality, political polarisation and diminishing trust in institutions. The catalyst for the connection between the two evolved through morality as an economically functional tool. Morality is deeply rooted in an evolutionary perspective – in order for humans to survive in a more intricate global economy cooperation was essential and a moral system emerged to enforce prosocial behaviours.

Particularist and Universalist moral values

As the economic environments change so too do moral values. The increase in globalisation may have shifted from a Particularist to a Universalist framework:

• Particularist moral values– societies with strong extended family networks. They prioritise loyalty to family and local communities. In regions where survival depended on close cooperation with neighbours, like areas with fertile, uniform land, particularist values emerged, emphasising strong community bonds crucial for successful agriculture. Particularism is pro-political and economic dynasties and oligarchies. These people are loyal to themselves and their kind.

• Universalist moral values – societies with loser kinship networks with fairness extended to strangers and distant relations. In societies with frequent market interactions among strangers, universal values tend to thrive, as such interactions foster moral norms that encourage impersonal cooperation and trust. Areas that have more varied agricultural conditions may foster universalist values as cooperation with neighbours was less important for economic production. Universalism is found to be characteristic of those who are more progressive and democratic and who prioritize fairness and equality for all.

Moral values and outcomes

Economic conditions —> moral values —> political and economic outcomes

In what is a political polarising climate moral differences often support varying opinions on economic policy. Particularist and universalist values help explain why groups hold opposing views on climate change, immigration, taxation, foreign aid etc.

Universalist – prioritise fairness, equality for all and more likely to support redistributive policies. Support globalist policies like foreign aid, globalisation and climate change prevention.

Particularist – often oppose the above fearing redistribution may benefit out-groups or strangers at the expense of of their own community, or that immigration may harm their neighbours’ prospects of finding a job.

This significant and persistent division within a society based on differing moral values leads to political division and complicate efforts to reach a consensus and economic policies.

Studies of US voting patterns reveal that voters’ moral values closely align with the rhetoric and policies of political candidates. US districts are said to be universalist when a larger share of donations from that district goes to more distant beneficiaries, geographically or socially. Also districts with higher universalism tend to vote Democrat and elect representatives who use universalist moral language in their speeches.

Combine moral psychology and economics?

Each of these disciplines stand to gain from each other. Economists excel in managing and analysing data while moral psychologists are adept at understanding the complex processes of individual decision-making and moral reasoning. For example, in the case of redistribution of income, psychological research helps explain why people hold moral beliefs about fairness and equality, while economic data shows how these beliefs influence voting behaviour and policy choices.

Policymakers need to understand that people’s preferences are often rooted in their moral values, which can lead to strong opposition between groups with differing beliefs. Recognising these moral differences can help in creating policies that are both fairer and more effective. For instance, redistributive policies that appeal to universalist values may gain broader support if they are framed in ways that also reverberate with particularist values—such as highlighting benefits to local communities. This approach could be crucial for bridging moral divides and building greater public consensus.

Source: Reconnecting Morality with Political Economy by Benjamin Enke – IMF F&D March 2025

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