Envy and Evolution
According to a New York Times editorial on Sunday, “Alan Krueger, chairman of the White House Council of Economic Advisers, noted in a speech on Thursday that the median income in the United States had actually declined since 1999, shrinking the middle class while the income of the top 1 percent soared. Such inequality is corrosive. And pointing it out has nothing to do with envy and everything to do with pressing for policies to help America’s struggling middle class.”
I agree that income inequality is a serious problem (especially in the U.S., where it is more egregious than in any other developed country), and that corrective measures of some sort are definitely needed. But it might surprise the Times editorial board—and many Brainstorm readers as well— to learn that, in fact, concern with income inequality has a great deal to do with envy.
Take this little test. Which of the following worlds would you prefer to inhabit?
You earn $50,000 and others earn $25,000, or
You earn $100,000 and others earn $250,000.
When graduate students in public health at Harvard were asked this question, more than one-half of them preferred situation No. 1. This result is so startling that it is worth repeating: More than one-half of presumably intelligent young adults decided that they would rather earn less money (a whole lot less!) so long as it was more than their neighbors and colleagues. Traditional economic theory has a very hard time making sense of this, since it assumes that individuals, being rational “utility maximizers,” should seek to maximize their income whereas in fact they are more concerned with maximizing their income relative to that of others … i.e., they are very much in the grip of envy, maybe even spite.
Interestingly, this result didn’t apply when the same people were asked to choose between these two conditions:
1. You have two weeks’ vacation and others have one week
2. You have four weeks’ vacation and others have eight weeks
Here, only about 20 percent of the respondents chose option 1. The likelihood is that there is something about conspicuous “goods”—i.e., income and the stuff it enables—that render them especially liable to generate envy.
Some more evidence for the role of envy: According to a National Bureau of Economic Research Working Paper, an increase in the average income in a state where you live decreases your average happiness by fully one-third as much as raising your own income increases it. And as reported in the Journal of Public Economics in the UK, an increase in salary for workers in one’s own area of specialization reduces one’s job satisfaction as much as an increase in one’s own salary raises it!
Yet another startling finding for anyone who doubts the potency of envy: It has been shown that if a woman’s sister’s husband earns more than the first woman’s husband, the second woman is more likely to go to work—evidently trying to keep up with her sister’s family’s income.