Fear and Loathing of Wall Street: Political Liberalism, Uncertainty, and Threat Management in a Dangerous Economic World

Abstract

Conservatives perceive the world as a more dangerous and threatening place than liberals, which explains conservatives' more cautious social behaviors and their greater support for policies (e.g., anti-immigration and harsher punitive measures) that aim to manage and reduce perceived threats and uncertainties. However, past research operationalized the "world" as a place replete with social and physical threats (e.g., street crimes and terrorism). Less attention has been given to the economic world, which is equally characterized by threatening events (e.g., corporate crimes, stock market crashes). In four studies, we examined whether differences in appraisal of the economic world explain ideological differences in stock market participation and neoliberal economic policy preferences. The findings reveal that liberals perceive the stock market as a more dangerous and riskier place than conservatives. This asymmetry explains liberals' cautious investment behaviors, their greater support for regulation of the stock market, and their greater opposition to privatization of Social Security. We argue that liberals' greater support for these policies serves to protect investors and the general public from the perceived harms of the economic world. Our findings suggest that the psychological processes underlying threat management and uncertainty reduction are similar for conservatives and liberals, but these processes are context dependent.

Economic Threats, Political and National Identification Predict Affective Polarization: Longitudinal Evidence From Spain

“…Another explanation is that the salience of elections during the study's data collection period made left-wing participants who were satisfied with the economy more responsive to emerging rightwing political campaigns demanding economic reforms. These exploratory findings are aligned with previous research showing that reactions to threats depend on the type of threat (Brandt et al, 2021), ideological differences (Fiagbenu & Kessler, 2022), and the salience of elections (Hernández et al, 2021).…”

The stock market is rigged? Conspiracy beliefs and distrust predict lower stock market participation

“…Furthermore, social trust may not be the only mediating variable in the relationship between conspiracy beliefs and stock variables. Recent studies show perceptions of danger and risk in the stock market also mediate the relationship between political beliefs (which are linked to conspiracy beliefs) and stock ownership (Fiagbenu & Kessler, 2022). Since trust and risk perception are strongly linked (Siegrist et al, 2006), future studies should investigate whether general risk aversion and perception of the stock market as a risky place to invest money also mediate the relationship between conspiracy beliefs and stock market participation.…”

“…Demographic factors such as age, sex, education, wealth/income and political ideology determine participation in the stock market (Bertaut, 1998;Haliassos & Bertaut, 1995;Jianakoplos & Bernasek, 1998;Kaustia & Torstila, 2011). Stock market participation also increases with increase in subjective wellbeing (Rao et al, 2014), cognitive ability (Grinblatt et al, 2011) but decreases with increase in distrust (Balloch et al, 2015;Georgarakos & Pasini, 2011;Guiso et al, 2008) and risk perception (Dohmen et al, 2011;Fiagbenu & Kessler, 2022).…”

Left and right ideological orientations as intragroup strategies of cultural preservation and promotion

“…Furthermore, these ideological shifts seem to be constrained to the particular threat and do not generalize to other issues. For example, people may become conservative about security issues following a safety threat, but stay liberal about social or economic issues (e.g., healthcare or wages), underscoring the importance of context (Lambert et al., 2010; Huddy & Feldman, 2011, see Elad‐Strenger et al., 2020; Fiagbenu & Kessler, 2022; Fiagbenu et al., 2021; Kam & Estes, 2016; Steiger et al., 2019; Van Leeuwen et al., 2017 for intragroup ideological variability in risk taking, disgust and contempt).…”