DP5908 A Theory of Tolerance

Author(s): Giacomo Corneo, Olivier Jeanne
Publication Date: October 2006
Keyword(s): modernity, occupational choice, symbolic values, tolerance
JEL(s): D1, O1
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=5908

We develop an economic theory of tolerance where styles of behaviour are invested with symbolic value. Value systems are endogenous and taught by parents to their children. In conjunction with actual behaviour, value systems determine the esteem enjoyed by individuals. Intolerant individuals have all symbolic value invested in a single style of behaviour, whereas tolerant people have diversified values. The proposed model identifies a link between the unpredictability of children's lifestyles and tolerance. Under uncertainty, an open mind performs like an insurance against the risk of suffering a large loss in self-esteem when adult. From another angle, tolerance makes people capable of fully exploiting market opportunities. Sometimes, public policies in favour of tolerance can be recommended on efficiency grounds.