Meaning and Markets
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By John Bitzan and Clay Routledge
The role of economic freedom in human progress is difficult to ignore. Indexes of economic freedom show that countries with higher economic freedom have higher incomes, lower levels of poverty, lower infant mortality rates, longer life expectancies, more political freedom, more gender equality, and higher levels of happiness.
Despite this evidence, many Americans are not strong supporters of economic freedom. For example, a 2019 survey found that one-third of American adults had a negative view of capitalism. Among Americans under the age of 30, the number shot up to nearly 50 percent. Not surprisingly, economic views also vary widely as a function of political identification, but is there a deeper psychological phenomenon that also influences these differences? We propose that people’s beliefs about meaning in their lives have a powerful impact on how they think about economics as well as their own entrepreneurial and related ambitions.
To appreciate this connection, it is important to consider just how vital meaning in life is to health and well-being. A lack of meaning is a major risk factor for a wide range of personal problems. For example, people who do not believe their lives have meaning are more likely to be depressed, anxious, and suicidal. They are also more likely to abuse drugs and alcohol. Individuals who have a strong sense of meaning in life are not only less likely to suffer from these problems, but they are better able to cope in healthy and productive ways with life’s inevitable challenges and hardships, such as disease diagnoses or the deaths of loved ones. In addition, people with a strong sense of meaning generally live longer, healthier lives.
Understanding why meaning promotes good psychological and physical health provides clues as to how it might influence economic beliefs and related aspirations. Meaning in life has great motivational power. It energizes goal-directed action. Consider, for example, a 2018 study of previously physically inactive adults. This research found that when pursuing fitness goals, the more these individuals focused on meaning in their daily lives, the more likely they were to visit a fitness center and the longer they worked out.
More broadly, numerous experimental studies find that having people reflect on what gives their lives meaning makes them more motivated to pursue goals and more confident that they can overcome challenges and accomplish these goals. When people believe they have a significant role to play in the world, they are more driven, focused, and optimistic about their future. They are better able to regulate their own behavior in ways that generally lead to positive life outcomes.
In other words, meaning inspires personal agency, which suggests that it could have important economic implications. In fact, a strong sense of purpose in life has been found to predict future income and net worth. However, past research has not focused on how meaning may connect to people’s economic worldviews or specific relevant goal-related activities, such as entrepreneurship, that are central to the economic health of a free society.
As part of the work of a new institute at our university—the Sheila and Robert Challey Institute for Global Innovation and Growth—we are exploring the connection between people’s beliefs about the meaningfulness of their lives and their views about capitalism and entrepreneurship, as well as their own entrepreneurial and other work-related ambitions. To this end, we recently conducted a survey examining some of these potential connections.
Our sample consisted of more than 1,200 adults living in the United States ranging in age from 18 to 88 (the average age was 45). Participants completed questionnaires assessing psychological characteristics, including questions about meaning in life. We were particularly interested in people’s belief that they have the ability to pursue, achieve, and maintain a meaningful life—what we refer to as existential agency—and thus asked questions capturing this motivational dimension of meaning.
After answering these questions, participants responded to items regarding their general views on economic freedom and questions about the extent to which they believe capitalism can help solve societal challenges such as climate change, automation, and poverty. They also responded to items assessing how much they believe entrepreneurship benefits society, as well as their own motivation to become entrepreneurs.
Concerning overall views of capitalism, 40 percent of respondents had a positive view, 46 percent a neutral view, and 14 percent a negative view. Consistent with past surveys, young adults had less positive views about capitalism than older adults. Democrats and Republicans, and liberals and conservatives, also differed in predictable ways, with right-leaning respondents having more favorable views of capitalism.
Critically, existential agency was also strongly related to beliefs about economic freedom. Individuals reporting a strong belief in their ability to live a meaningful life (high levels of existential agency) were the most likely to have a positive view of capitalism. Similarly, existential agency was a strong predictor of the belief that capitalism can help solve societal challenges such as climate change, automation, and poverty. And we observed the same pattern when examining attitudes about the importance of entrepreneurship in our society.
How do we know that it is existential agency that influences views about capitalism and entrepreneurship, and not just the influence of other relevant variables such as political ideology, age, employment status, and income? To address this concern, we also measured these variables and find that, even when statistically accounting for them, the effects of existential agency remain statistically significant and strong. Existential agency has a unique and important relationship with views about capitalism and entrepreneurship.
In addition, about a quarter of respondents indicated that they plan to start a business in the future. Among this group of aspiring entrepreneurs, existential agency is a unique and strong predictor of how motivated they are to pursue their business goals. These results are consistent with laboratory experimental research showing that when people are prompted to focus on what gives their lives meaning, they are more confident in their own abilities, more driven to pursue their most important goals, and more hopeful about their future.
Focusing on the social nature of meaning can also help clarify how existential agency has important business and economic implications. Study after study finds that meaning is found in social relationships. Critically, meaning isn’t simply the result of being socially accepted by and getting along with others; it is the belief that one has a significant role to play in the world. People need to feel like they matter, that they are contributing to their families, communities, and society in valued ways.
These factors help explain how existential agency can drive entrepreneurship. Entrepreneurs often start new businesses because they believe they have a service or product that can improve people’s lives. To some, entrepreneurship supports the pursuit of meaning because it involves building a family business they envision will continue for many generations. Others engage in entrepreneurial activities as a way to take more control over their time so that they can spend more of it with their children. Business owners also pursue social meaning by providing jobs and helping support charities, the arts, and other organizations that benefit society.
Existential health may prove vital for economic health because it is when people view themselves as able to make meaningful contributions to the world (high existential agency) that they will be most driven not only to start new businesses, but to engage in all sorts of work, both paid and unpaid, that is necessary for a society to thrive. In fact, when people experience an absence of meaning and thus believe they do not have a consequential role to play in society, they are not only less helpful to others, but they are more inclined to engage in the types of maladaptive and unhealthy behaviors, such as drug and alcohol abuse, that often end up harming the rest of society and, ultimately, undermining freedom. If large numbers of people are not successfully regulating their own behavior in ways that keep them and their communities safe, healthy, and financially stable, many will expect the state to take a larger role in structuring and controlling society.
Existential agency is especially important in times of crisis and uncertainty because it gives people the resolve and inspiration needed to solve big problems. In the United States, we face important policy issues related to an economic recovery from the COVID-19 pandemic. The pandemic and the associated shutdowns have resulted in record job losses, record drops in economic activity, and the permanent closure of many businesses. Moreover, these impacts have been disproportionately realized in minority communities, where job losses have been higher and where larger numbers of businesses have closed.
As we emerge from the current pandemic, a strong economic recovery will depend on private-sector innovation and entrepreneurship and a confidence in the free-market system. As businesses adjust to changing behaviors and preferences associated with social distancing, they will need to find new ways to deliver and produce goods and services. This will also present new opportunities for entrepreneurs who are able to innovate. And, as our research shows, people who believe their lives have meaning will be better suited to seizing these opportunities.
All of this has implications for current policy efforts aimed at reducing the economic damage caused by the pandemic. Policies and regulations that make it difficult for people to contribute to their families and society (e.g., policies that limit incentives to work or make it difficult to hire people) or policies that send the message that people need to rely on the state to solve their problems are likely to undermine the meaning and existential agency that allow individuals and society to thrive.
Similarly, a focus on meaning and existential agency is important in addressing racial disparities and enabling a strong recovery for minority businesses. We separately analyzed 146 self-identified Black Americans and found results that were similar to our overall sample. Black Americans who are highly motivated to pursue their entrepreneurial aspirations have significantly higher levels of existential agency and meaning in comparison to those who are less motivated to pursue entrepreneurial goals. Existential agency is also an important predictor of a belief in entrepreneurial solutions to important societal problems for Black Americans.
While our sample sizes are too small to explore these relationships for other individual racial minorities, an analysis of 331 non-White participants (which includes Black participants) shows that, as with White respondents, existential agency is an important predictor of entrepreneurial motivation and belief in entrepreneurial solutions to problems. In addition, it is noteworthy that 46 percent of Black participants and 36 percent of non-White participants in our sample plan to start their own businesses, in comparison to 19 percent of White participants. These results give strong reason to believe that a focus on meaning will help to promote flourishing for everyone. Moreover, they suggest that policies that make it easier to start a business are likely to be an important way to enable the pursuit of meaning and prosperity for many Americans, especially ethnic minorities.
Finally, there is some concern that young Americans have lost faith in the institutions and values that are foundational to meaning and existential agency. This concern correlates with recent polls showing that the percentage of young Americans who view capitalism positively has decreased. This finding emphasizes the importance of positive cultural messages that focus on the need for meaning and existential agency for the future of our society. Sending messages that people are victims, and that they have little control over their circumstances, are likely to harm the existential agency that is needed to enable a future in which America is thriving and opportunities are abundant.
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