How the Just World Fallacy Impacts Your Financial Life

Whether you believe in it or not, the just world fallacy impacts your life. It influences many decisions that people make, whether financial, political, or just day-to-day. The effects are all around you.

So what, exactly,  is the just world fallacy, and how does it impact your financial life?

What is the Just World Fallacy?

The just-world fallacy (commonly called the just-world hypothesis) is the belief that the world is fair. Good things happen to good people, and bad things happen to bad people.

This misdirected belief can make life easier. It’s much easier to blame someone (or yourself!) for misfortune than to accept that the world is unfair.

Humans sometimes need to believe that good things will happen if we do the right thing. It’s so hard to wrap our heads around the complete lack of concern that the world has. 

Things can’t just be random. There has to be a reason for everything, even if that reason is that we’re to blame.

Examples of the Just World Fallacy

Keen observers can hear the Just World Fallacy play out all around them. 

Common phrases such as “You’ll get what’s coming to you,” “What goes around comes around,” and “everything happens for a reason” all hint at the worldview that everything evens out in the end. Hence, the world is fair. 

Religious Belief in the Just World

Religions around the world support the hypothesis. The Hindu idea of Karma is all about getting back what you put into the world. Many religions have a concept of destiny or a great cosmic balance. 

Calvinism, an offshoot of Protestantism extremely popular in early America, preaches that wealth and good fortune in this life are blessings from God. According to the belief system, the wealthy are good, and the poverty-stricken must have done something to deserve their punishment.  

How the Just World Fallacy Impacts Personal Finance

The insidious belief in a fair world keeps some people trapped in a vicious cycle of poverty and keeps others believing that they deserve it. 

Numerous legal policies and social attitudes in the US are, at their core, related to the just-world fallacy.

It also affects people on an individual level. People get so wrapped up thinking they deserve these random bad things that happen to them that they stop trying. They stop believing they can do better. Instead, they blame themselves for misfortune and spiral into a never-ending cycle of guilt and despair.

The irrational thoughts create a challenge that is too overwhelming to overcome. 

Financial Policy

The most drastic impacts of the just-world fallacy emerge in the policies our country supports. So many of the programs and initiatives we see have roots in this hypothesis -from health care to education, wages to food stamps. 

Our country has normalized the idea that good things happen to people who deserve it and bad things happen to those who don’t, to such a massive extent that most of our social structures support it.

Examples of the Just World Phenomena in Policy

Examples of the Just World Fallacy abound in our political rhetoric. Here are examples of political views that highlight how the fallacy impacts voting and political decision-making. 

Wages: It’s your fault if your wages are low. You should’ve gotten an education and a better job. The minimum wage was never meant to support an adult life anyway.

Education: You should have gone to college if you wanted a better job.  It’s your fault you have so much debt. Why did you take out so many student loans? If you tried harder in school, you’d have a better job.

Healthcare: You should have taken care of yourself better. Get a better job if you want to take time off if you get sick.

Food stamps: You shouldn’t have had kids you can’t afford to feed. 

Every response to any societal ill showcases the Just World Fallacy. It’s blaming people for their circumstances and attacking them for daring to speak out against the status quo. The answer is always “it’s your fault.” 

Nobody wants to look beyond the easy out and examine the larger issues contributing to these problems. 

Accountability Vs. Circumstances

Proponents of a just world will say that the people in the above examples are responsible for their own actions. They made choices and are accountable for the outcomes.

To a certain extent, they’re right, but the response lacks nuance. Circumstances beyond our control affect our lives far more often than most people would like to believe. The Just World Fallacy assumes extenuating circumstances are rare one-in-a-million exceptions, but they’re not. 

Take a different look at the four examples above from a new perspective. In this fresh perspective, imagine the world isn’t fair, and the outcomes result from systematic rather than personal failure. 

Wages: Wages are disgracefully stagnant, and with all the advances in automation, there are fewer high-paying jobs. Getting a new job is more challenging than simply applying. Many companies don’t offer competitive salary increases, so if employees want to keep up with inflation, they must job-hop. 

Education: You can’t say that everyone needs to pursue higher education and also say it’s everyone’s fault they are in debt for taking out loans. Our educational system needs to be corrected if only the rich can afford to better themselves. Arguments that you should “go to school and get a better job” completely discount the fact that not everyone has the aptitude for education. Should those who don’t be resigned to a life of abject poverty?

Healthcare: Accidents and illnesses can affect anyone, regardless of how well they care for themselves. Getting a better job is more challenging than you make it sound (see examples on education and wages above). And why is healthcare tied to employment anyway?

Food Stamps: There’s a severe lack of sexual education in the United States, and contraceptive is notoriously hard to get for women. Maybe if we provided people with the education and resources they need, they would make better family planning decisions and wouldn’t need to rely on food stamps to feed their children.

As you can see, these examples (and many more) show that it’s not always about personal responsibility. Policies and programs are in place that actively prevent people from getting ahead. Others then justify the poor outcomes by saying they don’t deserve to get ahead because they’ve made bad choices. This is the just-world fallacy at work in our policy-making.

Your Spending Reflects Your Beliefs

The Just-World Fallacy is also at play on an individual level, which can be even harder to identify. Sometimes, the belief that we don’t deserve something is so ingrained that it’s subconscious. So, we act out in ways that others wouldn’t understand. Why are we constantly making destructive decisions? Why do we do things that we know won’t benefit us?

Sometimes, these questions can be answered by a belief in the just world fallacy. If someone believes this hypothesis, even subconsciously, they may assume that because bad things happen to them, they are bad people and somehow deserve it.  

A streak of bad luck can completely destroy someone’s entire attitude. They stop saving money because it doesn’t matter. They stop investing for the future because they don’t think they have one. 

It can also have effects in the opposite direction – if you’re relatively fortunate in life, you can start to believe that it’s because you are a good person. But that line of thinking can lead you to think that others who aren’t so fortunate are bad somehow and maybe not as deserving of good things as you are. And that informs all your decisions, from the people you help to the policies you vote for. It’s a vicious cycle.

What Can We Do to Prevent the Just World Fallacy from Impacting Us?

The best thing we can do is understand it. We need to learn about the just-world fallacy and understand its implications. This will help us think critically about why specific policies are pushed while others are ignored. Understanding that some of this is psychological will help us make better-informed decisions for ourselves and our communities.

One of the first steps to overcoming ingrained biases is to identify them. Examining ourselves and confronting the falsities in our deeply held beliefs is excruciating – but it’s not impossible. And we will come out of it for the better, and our communities will benefit.  


3 thoughts on “How the Just World Fallacy Impacts Your Financial Life”

  1. But you said as much, it is only a partial fallacy. Two identically privileged people, one is honest and diligent and the other lazy and immoral, the honest person will do better nearly 100% of the time. No one would dispute this. The problem is people aren’t equally positioned for success at no fault of their own. And no sane person would dispute that’s unfair, that life is inherently grossly unfair. Great thought provoking piece. I’m one of the most advantaged people I know, in every way, and my success was inevitable in spite of a lack of grit. I know that’s unfair. Much better people than me much less, and suffer much more.

    • I’m glad you enjoyed the post! I don’t think it’s a partial fallacy. I think some people (many, really) truly believe in it, either on a conscious or subconscious level. The truth in the way the world works is more nuanced. I don’t believe that every person who is in a bad position is there due to circumstances beyond their control – but I think circumstances affect people more than we like acknowledge. I think it’s a complex mixture of both, and never as simple as the just world fallacy tends to make it.

  2. Nice post, not thought of this before. It is a good example of the importance of critical thinking and not getting swept up into herd mentality…

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