The impact of meritocracy on asset pricing
Investigating how meritocracy enables economic growth
Research suggests that citizens in societies characterised by greater inequality are less concerned about inequality than those in more egalitarian societies. A possible explanation is that people are more likely to accept inequality if they believe that societal success reflects a meritocratic process rather than institutional advantages. This research investigates how real-world meritocracy affects people’s consumption choices, effort choices and financial markets. It offers a new channel to help explain cross-country differences in interest rates and equity-risk premiums and better inform policy interventions at state level.