Economist Jean Tirole’s Nobel win on Monday is now perhaps old news. Marginal Revolution and the National Business Review have covered the theoretical work in industrial organisation and game theory that won Tirole the prize.

But perhaps less covered are Tirole’s more speculative and fun works. Fortunately, University of Queensland economist Vera Te Velde provides us with a compilation of those greatest hits.

Tirole, especially in his work with Roland Bénabou, wonders a lot about the role of social norms and values on behaviour.

They’ve argued that beliefs about a just world can depend a lot on the extent of redistribution. When the social safety net is light, believing strongly that effort will be rewarded can yield self-reinforcing self-motivation encouraging hard work and thrift. When welfare is more generous, there is less incentive to believe in the merits of self-sufficiency, and consequently less effort. The fun part is that beliefs in both states can then be true, but that one yields a much richer society than the other. The interaction between welfare institutions, individual beliefs, and both personal and social outcomes is really rather important, and generally underexplored.

In other work, Bénabou and Tirole model individual beliefs about self-identity as assets. Seeing yourself as the kind of person who works hard and fulfils obligations turns temptations to take a sickie into threats to your self-identity. We consequently adopt personal rules to govern our behaviour to protect our self-image. Where we have imperfect recollection of our own motivations but better recall of our actions, self-regulating behavioural rules can work to shape our later perceptions of ourselves; you can bind your future self to hold certain beliefs by adopting rules today, such that your actions will be consistent with the kind of person you’d later like to be. In other words, you can build a very complicated mathematical apparatus justifying “fake it ‘till you make it”. Our self-serving overly optimistic beliefs about our own abilities, within bounds, can enhance our motivation to take those first steps and avoid the Total Perspective Vortex.

While the topics are fun and speculative, the Tirolean mathematical apparatus is ridiculously rigorous. So reading through them is perhaps only fun for certain types of economists; the subscription-restricted links protect most people from the mathematical versions of the arguments. As bottom line: beliefs matter. They interact with our economic structures to make institutions “stickier”. We can work to improve our own outcomes by working on our own beliefs, and especially when our economic institutions reward effort and diligence.