What kind of economy would you choose?

Imagine being asked to design the economic rules of a country before your life begins. You decide how opportunities are created, how public institutions operate, and whether the same rules will apply to everyone. There is only one condition: you will not know who you are going to become!

You may be born into wealth or poverty. You could become a business owner, an employee, or someone struggling to find a job. You might grow up surrounded by opportunities or spend your life trying to search for one. You must write the rules before any of this is revealed. Would you still build the same economy if you did not know which side of its rules you would live on?

More than fifty years ago, philosopher John Rawls gave this thought experience a name: The Veil of Ignorance. By removing everything we know about our future position, Rawls asked us to think about fairness without first calculating what would benefit us personally.

It sounds like a philosophical question. But it leads directly to an economic one: Should the circumstances we are born into decide our future?

Not everyone has the same starting point

We often explain success through effort, talent, and personal choices. All of these matter. But they enter the story only after something else has already been decided: where a person begins.

No one chooses their family income, birthplace, early education, or the opportunities surrounding them. Yet these circumstances can influence how far their effort takes them.

A 2025 World Bank study offers a striking example. In Colombia, circumstances present at birth explained 49% of income inequality, with place of birth alone accounting for as much as half of that inequality of opportunity. The data is specific to Colombia, but the message travels much further.

The World Bank’s latest Global Database on Intergenerational Mobility covers 87 economies representing 84% of the world’s population and shows that countries with greater income inequality tend to have a lower mobility between generations.

In other words, long before people make their first economic choice, some possibilities may already be opening while others are quietly closing. A fair economy does not promise everyone the same outcome. It asks that the circumstances of birth do not become a permanent verdict on someone’s future, and this depends heavily on the rules and institutions waiting for them once life begins.

The rules behind prosperity

This is where institutions enter the story. They may sound complicated, but we deal with them every day. Institutions include the courts that enforce contracts, the public bodies that provide services, and the systems intended to prevent corruption and protect fair competition. In simple terms, they determine whether laws are clear, whether they apply to everyone, and whether people can trust them.

Imagine that you want to open a small business. In one country, the process is straightforward, your contract is protected, and you can compete without knowing the right person. In another, requirements change without warning, approvals depend on connections, and a signed contract may offer little protection. The business idea may be the same, but its chance of success is not.

When the same experience is repeated across thousands of businesses, workers, and investments, it begins to shape the direction of an entire economy. People are more willing to invest, hire, and plan when laws are enforced, public institutions function, and corruption is controlled. When these protections are weak or absent, uncertainty grows and economic activity suffers.

This helps explain why institutions have become central to the study of development. According to the 2024 Nobel Prize in Economic Sciences, the richest 20% of countries are around 30 times richer than the poorest 20%.  The gap has many causes, but the prize recognized research by Daron Acemoglu, Simon Johnson, and James Robinson, showing that the quality of institutions is an important part of understanding why such gaps persist.

The Bottom line is simple: strong institutions cannot promise everyone success, but they can give effort a fair chance. So what happens when these rules are weak? For that, we do not need to look far...

Bringing the experiment home

Imagine designing Lebanon’s economic rules without knowing whether you will become a depositor or a bank owner, an employee paid in Lebanese pounds or in USDs, a business owner with connections or one without them. Would you still choose the same rules?

In Lebanon, this is no longer a philosophical question. An IMF diagnostic published in 2026 reported that 97% of Lebanese surveyed believed corruption was prevalent in national institutions. The World Bank governance indicators cited in the report placed Lebanon around the 10th percentile for control of corruption and the 13th percentile for rule of law, meaning it performed better than only a small share of countries in these areas. The IMF described weak governance, limited accountability, and a fragile rule of law as key drivers of Lebanon’s crisis, which had already erased around 15 years of economic growth.

These numbers are not simply about Lebanon performing poorly on an international ranking. They describe what happens when people loose trust if public institutions will function, contracts will be protected, or if the same rules will apply to everyone.

Of course, institutions do not explain every part of Lebanon’s economic collapse. Wars, external shocks, financial decisions, and years of policy failures all played a role. But institutions determine how well a country can prepare for these pressures, respond to them, and decide who carries their cost.

Behind the veil of ignorance, we may still disagree about taxes, government spending, or the size of public sector, but we would probably agree on a few basic protections: clear laws, functioning institutions, fair competition and accountability when those rules are broken. We would choose these protections because any of us one day might need them.

Perhaps that is the real test of an economy: not whether its rules work for us today, but whether we would still choose them without knowing where we might stand tomorrow.