Many of us measure our worth by comparing ourselves with our neighbours and peers. As long as we earn as much as our peers, we are fine. A new study has documented this tendency.
In a research conducted by a University of Toronto’s Rotman School of Management in collaboration with Australia’s Monash University and University of Waterloo, the team offered the participants two choices.
- If you get 8$, some stranger would also get 8$
- If you get 10$, some stranger will get 12$
An economist would believe that the obvious choice would be ii. But the psychologists have realised that i. is also a choice for those who have a security focus rather than a growth focus.
Those who feel insecure about themselves and are concerned about the relative social status would choose i. Prof. Geoffrey Leonardelli, who co-authored the paper with Vanessa Bohns from the University of Waterloo and Jun Gu from Australia’s Monash University believes that letting somebody earn more than themselves makes some individuals experience “low-status”.
Through a series of experiments, the team discovered that people who showed a regular preference for “relative outcomes” [how much more do I get relative to others?] had a focus on security and were keen to being assigned to a lower position or rank. But those who looked for “absolute” outcomes [where do I benefit more?… irrespective of benefit to others] had a “growth” focus, one that goes after maximum positive results.
Jun Gu, the lead author of the research, said “People with a security focus also tend to walk away from economic deals that suggest they have low status, even if walking away means earning less money than they could have.”
“People with a growth focus appear to more easily move back and forth between cooperation and competition, because they have no special fears or concerns about their own security,” said Leonardelli.
If governments wish to practise economic policies that drive growth, these findings indicate that they first need to address social inequality and the ensuing feelings of insecurity before they can expect whole-hearted support for the growth-driving policies.