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The two sides of envy

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  • Gershman, Boris

Abstract

The two sides of envy, destructive and competitive, give rise to qualitatively different equilibria, depending on economic, institutional, and cultural environment. If inequality is high, property rights are poorly protected, and social comparisons are strong, the society is likely to settle in the "fear equilibrium," in which better endowed agents restrain their efforts to prevent destructive envy of the relatively poor. In the opposite case, the standard "keeping up with the Joneses" competition arises, and individuals satisfy their relative standing concerns through suboptimally high efforts. The different nature of these equilibria leads to starkingly contrasting effects of envy on economic performance. From welfare perspective, adoption of better institutions may not be Pareto improving, since positional externality is curbed in the low-output fear equilibrium. The theory is consistent with broad empirical facts from social sciences and bridges the gap between separate lines of research on envy.

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  • Gershman, Boris, 2010. "The two sides of envy," MPRA Paper 25422, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25422
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. About envy
      by Economic Logician in Economic Logic on 2010-11-01 19:06:00

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    Cited by:

    1. Ahamad, Mazbahul, 2016. "Envious Preferences in Two-sided Matching," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235482, Agricultural and Applied Economics Association.
    2. Boris Gershman, 2016. "Long-Run Development and the New Cultural Economics," Working Papers 2016-06, American University, Department of Economics.
    3. Gershman, Boris, 2015. "The economic origins of the evil eye belief," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 119-144.
    4. Barnett, Richard & Bhattacharya, Joydeep & Bunzel, Helle, 2016. "The Fight-or-Flight Response to the Joneses," School of Economics Working Paper Series 2016-12, LeBow College of Business, Drexel University.
    5. Zeballos, Eliana, 2015. "Getting a Leg Up or Pulling it Down? Interpersonal Comparisons and Destructive Actions: Experimental Evidence from Bolivia," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205660, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    6. Yingchao Zhang & Oliver Fabel & Christian Thomann, 2015. "Pay inequity effects on back-office employees’ job performances: the case of a large insurance firm," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(2), pages 421-439, June.

    More about this item

    Keywords

    Envy; Inequality; Positional Externalities; Property Rights;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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