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Why Envy Can Destroy Economic Progress

Summary:
Economists think that culture is a fuzzy concept. Yet as research demonstrates, culture provides insight into a country’s potential for growth. One cultural feature worth studying for its propensity to impede development is envy. Envy is described as a feeling of resentment motivated by the achievements of other people. The manifestation of this emotion can be destructive ...

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Economists think that culture is a fuzzy concept. Yet as research demonstrates, culture provides insight into a country’s potential for growth. One cultural feature worth studying for its propensity to impede development is envy. Envy is described as a feeling of resentment motivated by the achievements of other people. The manifestation of this emotion can be destructive or progressive. Gaining education, starting a business, or investing are examples of constructive envy. The desire to outperform one’s rival can serve as an incentive to engage in productive activities. Specifically, studies posit that individuals work longer hours to compensate for the fall in income relative to other groups.

However, many have argued that constructive envy is more dominant in developed countries, whereas the fear of destructive envy is pervasive in the developing world. This is because in countries with weak institutions—i.e., institutions that don't protect private property—fewer people are likely to become wealthy; hence the scarcity of success makes achieving pretentious. As a result, competent individuals rationally avoid enterprising initiatives to thwart the schemes of envious people. As expected, envy-avoidance behavior imposes a constraint on productivity, thus restricting the growth of material prosperity. In anthropological studies scholars posit that the intention to prevent the effects of destructive envy has resulted in the deliberate underproduction of crops.

To people in an envious environment, the benefits of performance outweigh the costs of destructive envy. In “Envy and Agricultural Innovation: An Experimental Case Study from Ethiopia,” Bereket Kebede and Daniel John Zizzo illustrate that destructive envy is a deterrent to adopting agricultural innovations. The authors report that in one of the study villages, a man burnt his brother’s farm when his brother cultivated a more lucrative cereal. Therefore, destructive envy entails a deadweight cost, since instead of being productive envious people are invested in undermining the efforts of their neighbors.

When individuals are precluded from enjoying the gains of innovation due to envy, society can only regress. Furthermore, envy traps poorer countries in poverty, because it creates mistrust and reduces the social capital necessary for forming large-scale networks. If individuals do not trust each other, they will be reluctant to share ideas with outsiders and as such may lose valuable opportunities. Trust lowers transaction costs, and without it business formation can become a burden.

Yet destructive envy as a barrier to development in poor countries is insufficiently examined, notwithstanding the evidence suggesting that it is more important than assumed. Boris Gershman in “Envy in the Process of Development: Implications for Social Relations and Conflict” contends that the manifestation of envy in rich countries is quite different from in the developing world:

In the 2002–2003 wave of the Afrobarometer survey, an impressive average of over 9 percent of respondents in nine African countries named envy/gossip as one of the three most important sources of violent intergroup conflict, alongside religious and ethnic rivalry, disputes over land, and economic hardship…. The destructive potential of envy affects the incentives of those making investment, production, and consumption decisions…. For this reason, even though people strive for higher relative standing, they might not want to move too far ahead of others.

However, the potential of envy is more constructive in developed countries:

Under “keeping-up-with-the-Joneses,” envy-provocation via conspicuous consumption is normal, and the usual response to such behavior is to match the spending pattern of the reference group. Status-seeking via purchases of visible goods and services is, of course, an integral part of consumer culture. Envy is not avoided but rather sought, and envy-provocation is seen as desirable rather than as dangerous.

Gershman offers an explanation as to why destructive envy is infeasible in developed countries: “Intuitively, if individual property rights are well-protected, defense technology is accessible and effective, and punishment for disruptive activities is severe and inevitable, then the cost of engaging in destruction is high, thus making it an unlikely response.” Invariably, poor countries are deficient in institutions that can generate widespread prosperity. So, because people care about relative standing, one way for individuals in developing countries to protect their status is to engage in destructive envy. However, destructive envy does not confer advantages for citizens in rich countries, since their institutions are designed to engender continuous prosperity.

In revisiting the case of Tzintzuntzan in Mexico, Gershman reminds us that success can eliminate the adverse effects of destructive envy: “With the arrival of new opportunities, a by-product of Mexican economic growth, the persistent fear of envy that plagued the community began to dissipate, paving the way to peaceful emulation and sowing the seeds of a consumer society.” So, although intellectuals on the left usually attribute the failures of developing countries to capitalism, the evidence reveals that promarket policies are instrumental in generating prosperity. Evidently, destructive envy is a better explanation for the challenges encountered by developing countries than free market capitalism. Indeed, only the success generated by capitalism can tame the pernicious effects of destructive envy and improve the quality of life in developing countries.

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