Ulric B. and Evelyn L. Bray Seminar in Political Economy

I present a model in which people develop certain skills (or traits) and also assign worth to those skills. The worth a person assigns to different skills are the person's values. These values can be used to evaluate one's own skills and the skills of others. I show that when people are incentivized to place more value on skills for which they are comparatively advantaged, people with lower opportunities for success may be led to adopt more extreme values, to perform below their own capabilities, and to perpetually experience cognitive dissonance by developing skills that are inconsistent with their own values. Attempts to induce low-status individuals to invest in certain skills by increasing the marginal productivity of those skills can backfire, leading to increased inequality.

Full paper here.