Envy, malice and Pareto efficiency: An experimental examination

Steven Beckman, Buhong Zheng (), John P. Formby and W. James Smith
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Buhong Zheng: Department of Economics, University of Colorado, Denver, Campus Box 181, P.O. Box 173364, Denver, CO 80217-3364, USA
John P. Formby: Department of Economics Finance and Legal Studies, PO Box 870224, Tuscaloosa AL 35487-0024, USA

Social Choice and Welfare, 2002, vol. 19, issue 2, 349-367

Abstract: Economists have long speculated that envy and malice play important roles in economic decisions. Surprisingly little empirical evidence has been offered in support of such claims. This paper uses experimental and multinomial logit techniques to estimate the effects of envy and malice in economic decisions involving Pareto efficiency. Envy and malice turn out to be powerful motivations with strong differential impacts across countries and relative positions. In some cases, opposition to Pareto gains reaches 60%. Behind a veil of ignorance, however, opposition falls to 10% overall. Pareto efficiency thus garners its greatest support under conditions which can lay claim to greatest legitimacy, those free of situational and personal bias. "... the greater part of human actions have their origin not in logical reasoning but in sentiment. This is particularly true for actions that are not motivated economically.... Man, although impelled to act by nonlogical motives, likes to tie his actions logically to certain principles; he therefore invents these a posteriori in order to justify his actions." V. Pareto in The rise and fall of the elites (1968, p. 27)

Date: 2002-04-10
Note: Received: 2 February 2000/Accepted: 6 November 2000
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