Liberals perceive the stock market as a more dangerous and riskier place than conservatives, which explains liberals’ greater support for regulation of the stock market, and their greater opposition to privatization of Social Security

Fear and Loathing of Wall Street: Political Liberalism, Uncertainty, and Threat Management in a Dangerous Economic World. Michael Edem Fiagbenu,Thomas Kessler. Political Psychology, February 25 2022. https://doi.org/10.1111/pops.12805

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.

Check also Of deadly beans and risky stocks: Political ideology and attitude formation via exploration depend on the nature of the attitude stimuli. Michael Edem Fiagbenu, Jutta Proch, Thomas Kessler. British Journal of Psychology, November 14 2019. https://www.bipartisanalliance.com/2019/11/conservatives-do-not-generally-form.html

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Sensitivity to Perceived Dangers in the Social and Economic World

The context- and content-dependent nature of the relationship between ideology and threat sensitivity can provide further insights into how conservatives perceive and react to different types of crimes. Here, we distinguish between two psychological contexts: the social world where social and interpersonal interactions occur and the economic world where interactions with corporations, financial markets, etc., transpire. Studies based on the Belief in a Dangerous World scale (Duckitt et al., 2002, p. 92)—a common measure used to assess beliefs about the uncertainties and dangers of social life—have consistently shown that conservatives perceive the social world to be a dangerous place where immoral people aim to rob, assault, and murder law-abiding citizens. This characterization suggests that the social world is a place replete with street crimes and terror (e.g., muggings, burglary, murder) and that conservative’s beliefs about the social world may be shaped by their greater sensitivity to physically harmful crimes (see Crawford, 2017; Eadeh & Chang, 2020). In contrast, white-collar and corporate crimes are widespread in the economic world (e.g., Ponzi schemes, bribery, embezzlements), and liberals are more concerned about these crimes and perceive them as more serious than conservatives (Kroska et al., 2019; Unnerver et al., 2008; Zimring & Hawkins, 1978). But it is unclear whether these differences shape liberals’ perception of the economic world as a more dangerous and threatening place.

Most street crimes including burglaries cause immediate bodily harm (Kopp, 2019). Even in cases when burglaries occur without physical harm, the resultant feeling of victimization triggers cognitive and emotional states similar to those experienced following physical assaults (Janoff-Bulman & Frieze, 1983). It is, indeed, true that street-crime victimization may sometimes create negative economic impacts such as replacement of stolen property, paying medical bills, or unemployment due to injury. However, one may argue that fears and concerns about street crime are probably determined by the perceived risks of physical victimization (proximal effects) rather than economic victimization (distal effects). By extension, ideological differences in perception of the social world as a dangerous place (Jöckel & Früh, 2016; van Leeuwen & Park, 2009) may reflect conservatives’ (vs. liberals’) greater sensitivity to physical threats (see also Napier et al., 2018).

In contrast, white-collar crimes commonly occur during interactions with the economic world. These crimes are sometimes perceived as more socially and economically harmful than street crimes (Cohen, 2016; Friedrichs, 2010; Lynch & Stretesky, 2001; Michel, 2015; Piquero, 2018). The socioeconomic harms created by white-collar crimes also differ qualitatively from street crimes. For example, unethical corporate practices sometimes lead to bankruptcies, market failures, and financial crises (Greenglass et al., 2014; Schoen, 2016; Shover & Grabosky, 2010). These negative events typically cause widespread economic harms (e.g., debt, unemployment, foreclosures, etc.), which endanger livelihoods (Rheinhart & Rogoff, 2009; Yilmazer et al., 2015). Corporate scandals and financial crises weaken trust in the economic world and increase fear and risk perception of financial markets, which in turn reduce participation in the stock market (Giannetti & Wang, 2016; Kuvvet, 2018; Lim & Kim, 2018; Nguyen et al., 2017; Zhou, 2020).

Although economic adversity may create secondary outcomes such as illness, injury, or even suicides (Chang et al., 2013; Lynch & Stretesky, 2001; Michel, 2015; Yilmazer et al., 2015), these distal physical outcomes are usually mediated by proximate economic victimization and moderated by socioeconomic status, preexisting physical or mental health, or even seasonal timing (Ballester et al., 2019; Haw et al., 2014; Margerison-Zilko et al., 2016). Consequently, it can be argued that people’s sensitivity to white-collar crimes is primarily driven by their perceived risks of economic rather than physical victimization. If correct, then liberals’ greater concerns about white-collar crimes suggests that they may be more sensitive to economic victimization than conservatives, which may likely cause liberals (vs. conservatives) to perceive the economic world as a dangerous and threatening place.

Threat Management and Uncertainty Reduction in the Social and Economic World

Since conservatives and liberals are sensitive to different types of perceived threats and dangers, one would expect that they would adopt unique behavioral coping strategies and embrace distinct public policies that are well-suited for threat management and uncertainty reduction. Relative to liberals, conservatives typically amend their lifestyles and restrict their social activities (e.g., reduce traveling, avoid crowds and unsafe places) to safe spaces to minimize their risk of physical victimization (Reinhart, 2017; Sloan et al., 2020). Conservatives also support harsher punitive policies (McCann, 2008), more government spending on street-crime prevention (Rebovich et al., 2000; Ren et al., 2008), and stringent anti-immigration procedures than liberals (Doosje et al., 2009; Stewart et al., 2019). The overarching aims of these policies are to resist perceived harmful social changes and regulate activities that are perceived to increase social disorder.

In contrast, liberals also engage in behaviors which may help to minimize economic threats. Liberals are more cautious and intolerant of financial uncertainties in real and hypothetical stock-market games and also form more negative attitudes towards stocks than conservatives (Fiagbenu et al., 2021a; Kaustia & Torstila, 2011; Moore et al., 2010). Although there appears to the an ideological asymmery in stock ownership, the effect sizes are, however, small or insignificant, (r = .01–.20); and the relationship is moderated by financial self-efficacy (Han et al., 2019). However, these studies, taken together, imply that relative to conservatives, liberals may avoid the stock market presumably because they perceive it as a threatening place. But empirical evidence in support of this assertion remains to be established.

Furthermore, liberals also adopt policies that help them to cope with economic threats. First, experimental manipulations that increase the salience of corporate scandals increase support for regulation of financial institutions (Eadeh & Chang, 2020). In addition, liberals are more likely to support punishment of white-collar crimes and call for more government spending on their prevention than conservatives (Kroska et al., 2019; Michel et al., 2014; Rebovich et al., 2000). Further, liberals are more likely to support tighter regulation of the stock market and corporations than conservatives (Potrafke, 2009; Unnerver et al., 2008). Finally, to protect low-income workers and other vulnerable groups, liberals (vs. conservatives) oppose risky economic policy reforms such as partial privatization of Social Security (Devroye, 2003; Rudolph & Popp, 2009). Thus, relative to conservatives, liberals’ support for these policies can be interpreted as a motivation to reduce the perceived harms caused by unregulated practices in the economic world. If correct, then one would expect that liberals would perceive the economic world as a dangerous and threatening place than conservatives.