Human Behavior

Key Takeaways SUV Pioneer: The 1977 Lada Niva was the world's first monocoque-bodied SUV – a design copied for decades. Sales Giant: Despite being "terrible to drive," the Lada platform is the third best-selling single-generation design in history. Built to Break – and Fix: Ladas came with 21-piece toolkits because owners were expected to repair them themselves. Reverse Exports: After UK sales ended, British Ladas were bought up and shipped back to Russia as superior "export spec" models. Extreme Explorer: Nivas served in Antarctica and reached Everest base camp at 17,080 feet. For decades, the Lada has been the four-wheeled punchline of the Western world. To many, the name conjures images of shoddy Soviet engineering, questionable reliability, and a litany of jokes about its performance—or lack thereof. ...

Economics Envy: The Dual Calculus of Human Motivation ← Series Home Key Takeaways Wealthy-Harming Preference: Desire to punish rich even if inefficient, yielding less aid for poor. Empirical Evidence: 14%-18% chose higher taxes delivering less aid across countries. The Predictor: Dispositional envy only reliable predictor for WHP. The Motive Split: Compassion predicts helping poor, envy predicts WHP. Policy Necessity: Separate altruistic goals from spiteful motives in tax design. The Dual Calculus of Envy Policy motivation frequently includes a destructive, punitive component. Support for government redistribution policies is complex, driven by multiple independent motivations. The Wealthy-Harming Preference (WHP) describes the desire to tax or punish the wealthy even when that action proves economically inefficient. This punitive desire stems from malicious motives. For individuals exhibiting WHP, the reduction of the better-off person’s welfare is the goal itself, not just a byproduct of increasing their own resources. Historically, non-altruistic individuals support redistribution because they value reduced consumption by the rich. ...

Economics Envy: The Dual Calculus of Human Motivation ← Series Home Key Takeaways The Proscription: Envy historically condemned as destructive vice, "pain at good fortune of others". The Neglect: Modern social science ignores envy, enabling political use. The Political Engine: Envy as "silent partner of radical egalitarianism" mobilizing equity support. The Quantitative Link: Dispositional envy independently predicts redistribution support across countries. The Punitive Motive: Envy predicts Wealthy-Harming Preference prioritizing punishment over help. The Condemned Vice For centuries, envy has been strictly proscribed across major ethical systems due to its destructive nature. Aristotle defined envy succinctly as “pain at the good fortune of others”. Theological systems, exemplified by Thomas Aquinas, framed envy as “sorrow for another person’s good,” which is apprehended as one’s own evil. This moral condemnation positioned envy as the antithesis of charity and a force toxic to the social fabric. Ancient writers, including Basil and Cyprian, described envy as seeking to reduce the admired person “from happiness to misery”, cementing its status as an inherently malicious vice. This historical consensus acknowledges the severe social cost generated by envy. ...

Economics Envy: The Dual Calculus of Human Motivation ← Series Home Key Takeaways The Problem: High inequality and low mobility lead to malicious envy resurgence. The Mechanism: Low economic mobility causes brand malicious envy due to undeserved success perception. The Consequence: BME leads to negative word-of-mouth and boycott intentions. Strategy 1: Underdog brands avoid BME as success attributed to effort. Strategy 2: Charitable donations reduce BME in low-mobility contexts. Consumer Marketing’s Strategic Threat Consumer marketing faces a strategic threat driven by economic disparity. While marketing traditionally leverages benign envy to boost sales and drive consumer desire, rising social and economic inequalities expose a critical gap concerning the resurgence of malicious envy. This gap occurs because extreme inequality reinforces the perception that status and coveted goods are unreachable. This research explores and defines brand malicious envy (BME) as intense anger directed at successful brands perceived as undeserving of their achievements. Unlike focusing on envy toward individuals, this research confirms that brands can be direct targets of this spiteful emotion. ...

Economics Envy: The Dual Calculus of Human Motivation ← Series Home Key Takeaways Conspicuous Consumption: Buying expensive goods as public display of economic power and status. Positional Goods: Items whose utility depends on relative scarcity, not absolute quality. Chronic Dissatisfaction: Competitive wealth pursuit creates persistent "restless straining" to widen pecuniary interval. Welfare Loss: Competition creates "positional treadmill" diverting resources from saving to status display. Mitigation: Prisoner's dilemma mitigated by collective action like taxing positional consumption. The Positional Treadmill Structural economic costs are generated by relentless status competition. Institutional economist Thorstein Veblen provided a foundational framework for analyzing the economic manifestation of social competition. Veblen coined the term conspicuous consumption in 1899, defining it as the practice of buying or using goods that are of a higher price, quality, or quantity than practical. This spending functions as a public display of economic power specifically aimed at maintaining or attaining social status. The primary incentive for accumulation is pecuniary emulation, where the accepted legitimate end of effort becomes achieving a favorable pecuniary comparison with other men. Veblen’s framework also includes invidious consumption, the ostentatious display of goods performed explicitly to provoke the envy of other people. ...

Economics Envy: The Dual Calculus of Human Motivation ← Series Home Key Takeaways Fair Wage-Effort Hypothesis: Workers supply fraction of normal effort when actual wage less than perceived fair wage. Mechanism: Underpayment causes anger, reducing labor input. Antagonistic Outcomes: Comparative concern causes output restriction, efficiency losses, unemployment, sabotage. Wage Compression: FWEH explains observed wage compression, making internal structures more egalitarian. Reference Groups: Fair wage based on comparisons with co-workers in same firm. The Fair Wage-Effort Hypothesis Comparative concerns translate into measurable inefficiency within the workplace. Managers and policymakers must recognize that competition quickly undermines group performance if fairness is absent. The Fair Wage-Effort Hypothesis (FWEH), motivated by equity theory in social psychology and social exchange theory in sociology, precisely quantifies this behavioral response. This hypothesis states that workers possess a conception of a fair wage ($w^*$); if the actual wage ($w$) falls below this standard, workers respond by proportionally withdrawing effective labor input. This behavior follows the functional form: $e = \min(w/w^*, 1)$, where $e$ is effective effort supplied and 1 denotes normal effort. ...

Economics Envy: The Dual Calculus of Human Motivation ← Series Home Key Takeaways Envy vs. Jealousy: Envy responds to perceived lack of valuable object, jealousy to perceived loss of possession. Benign Envy's Value: Triggers constructive "leveling up" motivation toward self-improvement and emulation. Malicious Envy's Risk: Drives destructive "leveling down" hostility to diminish envied person's standing. Deservingness Factor: Malicious envy manifests when success appears undeserved, triggered by low perceived economic mobility. Policy Impact: Dispositional envy predicts preferences for inefficient, punitive policies prioritizing punishment over help. The Dual Nature of Envy in Organizations Managers need psychological precision to channel organizational comparison effectively. The potent human emotion of envy drives competitive behavior, but its effects range from fueling excellence to destructive spite. First, managers must precisely distinguish envy from jealousy. Envy represents distress arising from a perceived lack of a valuable object or achievement that another person possesses. In contrast, jealousy involves distress related to a perceived loss of a relationship or possession one already holds to a rival. The critical differentiation is simple: “Have-nots are envious of those who have; those who have are jealous of what they have”. ...

Economics Greed: The Dark Side of Human Motivation ← Series Home Key Takeaways The Primacy of Trust: Early modern commercial society relied entirely on a dense network of **honor and mutual credit**. Futures trading in tulips depended on these agreements for execution months after the initial contract. The Real Cost of Greed: The destruction associated with the crash was **not primarily financial** little economic distress was caused by the end of the mania. Instead, the crisis was one of **value, honor, and trust**. Wholesale Breaking of Promises: When prices collapsed in February 1637, buyers simply refused to honor their paper deals, acting **"in bad faith"** by denying promised transactions. They often justified their default by saying, **"I will do as another does"**. Authority Vacuum: Governmental authorities, paralyzed by the vacuum of solutions, offered little help, leading to a period of frustrating dithering and failed compromises (such as the unadopted 10% payment proposal). The speculative manias of the 17th and 18th centuries whether concerning tulips, Mississippi scrip, or South Sea shares all depended on a crucial but often unstated precondition: the structure of honor and credit that bound early modern society together. Commercial relations were built on a series of complex calculations about credit, requiring individuals to understand fully the reciprocal debt relations of their business partners. The tulip trade, which operated overwhelmingly as a futures market for common bulbs, was the ultimate expression of this reliance on paper promises. Deals made in October did not come to fruition until the “dry bulb time” in the summer. A futures trade relies on trust because, unlike a spot trade, it involves delaying the execution and payment of the promise for months. The entire fabric of this system, from the initial contract to the final delivery, was thus predicated on mutual faith that the promise would be kept. In short, “Without honor there was no credit, and without credit no honor”. ...

Economics Greed: The Dark Side of Human Motivation ← Series Home Key Takeaways The Panic of Social Inversion: The greatest moral fear generated by the tulip trade was the breakdown of established class hierarchy, leading to the scandalous inversion of the social order. The Propaganda Target: Pamphlets obsessively targeted **weavers** and the "foul rabble" as those using quick, dishonest wealth to become **"schijn-heeren"** (seeming-gentlemen) who dined like lords on Zandvoort fish. The Reality of the Speculators: Archival data contradicts the propaganda, showing that participants were generally **middle-level merchants, professionals, and higher-skilled craftsmen** (petty bourgeoisie), not low-level laborers like chimney-sweeps. A Sickness of the Head: The peak of the speculation in common bulbs (January 1637) occurred during a major outbreak of the **bubonic plague**; contemporaries explicitly linked the "sickness of the *blommisten*" (florists) to the literal sickness of the city. The astonishing price rises generated by financial speculation inevitably lead to rapid, unearned wealth for a few, shattering the social expectations built on generations of patient accumulation. In the Dutch Golden Age, where social order was highly valued, this phenomenon was viewed not merely as bad finance, but as a moral inversion of the natural world. Critics of the tulip trade focused intensely on social mobility, fearing that the unbridled and rapid acquisition of wealth by the lower classes would completely reverse the structure of society. Pamphleteers worried specifically about the blurring of rank, lamenting that “Flora who made weavers and tailors and other foul rabble into coach and horse-riders” who were seen “dominating, almost like little lords” in the inns. To those who valued stability, the idea that a weaver could suddenly become indistinguishable from a wealthy rentier was unconscionable. Such new money men were ridiculed as “schijn-heeren,” or “seeming-gentlemen”. The core pattern of greed, therefore, was its power to democratize riches and, in doing so, destroy social harmony. ...

Economics Greed: The Dark Side of Human Motivation ← Series Home Key Takeaways The Velocity of Paper: The intense speculative frenzy in the Dutch Tulipmania was primarily a phenomenon of a futures market, where bulbs were sold entirely **"on paper"** from mid-September onward, accelerating price swings twentyfold in a single month. Macro Greed, Government Scale: The Mississippi and South Sea Bubbles were not simply crowd folly, but **grandiose macroeconomic schemes**—large-scale **government debt-for-equity swaps**—backed by the entire apparatus of the governments of England and France. The Plausible Theory: Speculators gather around **convincing theories**, not each other. Law's scheme was initially a **plausible theory** for revitalizing the French economy through financial innovation, lending credibility to the resulting price surge. The Destruction of Honor: The critical system flaw in all early manias was the dependence on **honor and credit** to uphold paper promises. The collapse of the tulip trade manifested as a wholesale **breaking of promises** (or "bad faith") by buyers who refused to receive and pay for worthless goods. The most shocking element of the Dutch tulip speculation—the rapid, astonishing rise in prices—was fundamentally driven by a simple, yet powerful, mechanism: the futures market. While the high prices of rare bulbs were a “standard feature of markets in newly developed varieties,” the notorious “mania” centered on the common bulbs was an extremely short-lived phenomenon: a frenzy lasting only one month between January 2 and February 5, 1637. ...