The two sides of envy

Boris Gershman

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Envy; Inequality; Positional Externalities; Property Rights (search for similar items in EconPapers)
JEL-codes: D31 D62 D74 O10 O43 P26 Z13 (search for similar items in EconPapers)
Date: 2010-09-23
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/25422/1/MPRA_paper_25422.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/34168/3/MPRA_paper_34168.pdf revised version (application/pdf)

Related works:
Journal Article: The two sides of envy (2014)
Working Paper: The Two Sides of Envy (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:25422

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