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Envy, Black Magic, Growth and Inequality
By Lykke E. Andersen, La Paz, 24 July 2006
“Plato told Aristotle that no one should have more than five
times the wealth of the lowest-paid member of society.”
It has been reasonably well-established in the literature that
not only absolute income levels matter for the level of
happiness, but also relative income levels. You don’t
like to see too much poverty around you (thus the case for
altruism), but you don’t like to see rich, ostentatious people
either (causing envy). This article is mostly about the latter.
If you can’t increase your own income (for example because of
low social mobility), then you can theoretically improve your
happiness by reducing other people’s incomes. This would explain
such unconstructive behavior as vandalism and black magic.
My family is currently constructing a wall around our piece of
land in Alto Ovejuyo, La Paz, and a few weeks ago, when the guys
were clearing away some bushes, they found a bottle with half a
lizard and other weird items that indicated black magic with
malicious intention. Hopefully it was not targeted at us.
After all, it was found just on the border of our land and it
had been there for some years. And how much damage can a severed
lizard do, anyway?
After listening to the construction workers’ horror stories
about black magic and human sacrifices in the altiplano
construction business, however, we decided, just in case, to do
some white magic to counter the potential negative effects of
the black magic. So, last weekend a perfectly healthy,
beautiful, white, blue-eyed llama had his throat cut and his
blood poured into the foundation of our wall. A mesa blanca
was also burned, and supposedly you can read the future in the
ashes when it is burning down. According to the experts present,
and there were many of those, it could not have turned out
better. In the ashes there was clearly a puerta
del sol
(nice house), a frog (wealth) and an airplane wing (traveling),
so presumably we are OK.
According to a few Bolivians surveyed, envy is very strong among
the Aymara population (I don’t know anything about the rest
of the Bolivian population),
and malicious spells are frequently used. The sin that might
attract such a spell may simply be to be successful and not
share your wealth with those around you. Even if you share with
many of them, there may be others who feel ignored, so you can
never be safe.
What does such strong envy, backed up by pretty convincing witch
doctors, do to a society? First of all, if you risk dying a
slow, painful, inexplicable death if you are successful, you
might want to keep a low profile, keep your business micro-size,
and in general reduce your efforts
so
as not to risk becoming
too
successful. This, of course, would tend to put a brake on
overall growth.
Second, if you happen to become successful despite of this, you
would want to get rid of the money quickly. If you invest the
surplus in your business, that might make you even more
successful, so that is not a good idea. It seems that the
perfect way to get rid of excess wealth is to throw a big party.
You make people happy while showing publicly how generous and
sharing you are. Nobody objects to a good party. Just be careful
not to forget anybody when you send out invitations.
These conjectures would explain several facts about the Bolivian
highlands, such as the extremely low investment ratios, the
predominance of micro-enterprises that never grow to become
small or medium sized enterprises, and the lavish parties held
despite the very low incomes. I always found it irresponsible
that these relatively poor families spend so much money on
parties, instead of investing it in their children’s education
or in their micro-business. But now I can see why they might
consider this too risky.
This is admittedly mostly speculation, based on second or third
hand gossip, but there is real empirical evidence on the
strength of envy in other countries. For example, an experiment
carried out in the UK by Zizzo and Oswald showed that many
people are willing to pay in order to reduce the wealth and
incomes of others. They organized a series of experiments in
which groups of four people were given nearly equal sums of
money. The four had to gamble with their new wealth in random,
computerized
bets; two came out each time with more cash, and two with less.
Each was then given the chance to spend his money to reduce the
take of his fellow subjects, but it would cost him 25 cents for
every dollar destroyed that belonged to his fellow players.
Was anybody willing to spend money just to hurt others, while
leaving himself poorer? The answer is overwhelmingly yes. A
shocking 62% of the participants paid for the privilege of
impoverishing their peers
(1).
Several surveys have shown that many people would prefer lower
average income if these were more fairly distributed. For
example, Alesina, Di Tella & MacCulloch show, using 128,106
answers to a survey question about happiness, that there is a
large, significantly negative effect of inequality on happiness
in Europe, but not in the US
(2). The authors suggest that this is because social
mobility is higher in the US, implying that those who are
presently rich frequently go bankrupt, and the poorer may
suddenly strike it rich. If inequalities tend to average each
other out over time, inequality at a given point in time is not
so much of a problem.
Since social mobility is very low in Bolivia
(3), envy is likely to be strong, and its negative effects
on growth and development may be severe. More research on this
issue is clearly necessary, but it does seem to provide yet
another argument for improving social mobility.
(1) Zizzo, Daniel J. & Andrew Oswald (2001) “Are
People Willing to Pay to Reduce Others’ Incomes”.
(2) Alesina, Alberto & Di Tella, Rafael & MacCulloch, Robert
(2004) “Inequality
and happiness: are Europeans and Americans different?”
Journal of
Public Economics, vol. 88(9-10), pp. 2009-2042.
(3) See the
Social Mobility studies of INESAD.
Ó
Institute for Advanced Development Studies 2006.
The opinions expressed in this newsletter are those of the
author and do not necessarily coincide with those of the Institute.
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