Inequality and Relative Ability Beliefs

I present experimental evidence for a novel mechanism yielding inequality persistence. Just world beliefs research suggests that individuals believe they merit unequal treatment they experience. Merit depends on ability and effort so that disadvantage (advantage) may undermine (bolster) confidence in own relative ability. Because decisions determining economic success rely on such beliefs (e.g. competitiveness), inequality may self‐perpetuate. In multiple experiments, I randomly assign unequal pay for an identical task where performance depends on cognitive ability. I find that pay level consistently and substantially affects beliefs but not performance. Finally, I show that among males high pay increases competitiveness by 33%.