Self-Image, Self-Esteem, and Moral Capital (Highly Preliminary and Incomplete)

In order to help understand adherence to moral standards and the force of intrinsic motivation, we present an in…nite-horizon optimization model where an individual receives random temptations (such as bribe o¤ers) and must decide which to resist. Temptations yield consumption value, but keeping a good self-image (a high belief of being the type of person that resists) yields self-esteem. Because free will is less than perfect, actions depend both on types and intent, so selecting a good intent does not guarantee good behavior and past resistance is informative of a good type. We identify conditions for individuals to decide to build and maintain an introspective reputation for goodness (“moral capital”) and show that good actions lead to a stronger disposition to do good. Bad actions destroy moral capital and lock-in further wrongdoing at the individual level. Economic shocks that result in higher temptations have persistent e¤ects on wrongdoing of the a¤ected groups, although the e¤ects disappear asymptotically in a society that is in a demographic steady state. Societies with the same moral fundamentals and average moral capital may display di¤erent wrongdoing rates as a function of how much past luck has polarized the distribution of individuals’ moral capital. The model can be extended to rationalize tabooes and cases where the provision of extrinsic incentives back…res.