Abstract
This article examines envy as an important cultural link between inequality, institutions, development, and conflict. It argues that envy can be either a source of strife and stagnation or an engine for peaceful competition and growth. The fundamental conditions that activate the constructive side of envy and shut down its destructive side are access to productive investment opportunities, equality, security of property rights, and mild social comparisons. The dominant role of envy in society gives rise to a set of related cultural norms and beliefs that affect economic performance and social relations. While constructive envy is manifested in emulation or even envy-provocation -standard features of a consumer society- destructive envy produces a fear-of-envy culture that hampers economic incentives and creates an environment of suspicion and conflict.
Highlights
The essay begins by introducing the main stylized facts on envy and its two sides
If a person cares about relative standing, her welfare can be improved in two major ways: by increasing her own outcome and by decreasing the relevant reference outcome
The essay introduces stylized facts on constructive and destructive aspects of envy and presents a basic theory that captures qualitatively different equilibria arising in the presence of envy under alternative socioeconomic and institutional environments
Summary
Envy is a powerful motive of human behavior that has two sides, constructive and destructive. The dominant role of envy in society is jointly determined by a mix of economic, institutional, and cultural characteristics that channel envy in the direction of either self-improvement or disruptive, antisocial behavior. Policies favoring the former and discouraging the latter include the provision of opportunities for peaceful investment, equal access to those opportunities, as well as security of private property rights. The dominance of constructive envy creates a virtuous cycle of envy-driven economic growth that raises social welfare, renders harmful fear-of-envy culture obsolete, and contributes to long-lasting peaceful competition
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