Issue 25, Fall 2003

William A. McEachern, Editor

Does Everyone Love Raymond?

With greater frequency, behavioral economists are pointing out oddities that raise questions about how "rational" people really are. Interdependent preferences have been used to explain a variety of these anomalies. It's becoming clear, for example, that an individual's rank in the income structure is an important consideration in how that individual values a given level of income. Preference interdependence has implications for wages, tax policy, and even the grades we hand out. Students are concerned both with the grade they receive and their relative standing in the class.

To explore income interdependence, Andrew Oswald of the University of Warwick and Daniel Zizzo of Oxford University designed an experiment to see if people dislike other people's income enough to give up some of their own money to reduce it. At the beginning of the experiment, four players were given money and told they could bet any portion of it. After the betting round, two of the subjects received a "gift" of money, based on the alphabetical order of their last names. All players were told about this distribution rule. The combination of betting outcomes and the selective gifts created an unequal income distribution from the game. Subjects who received the gifts had about twice as much income as those who did not. Although subjects operated independently and anonymously on a computer terminal, each was fully informed of the results of the other three players in the experiment.

In the final round of play, each subject was allowed, though not encouraged, to anonymously destroy, or "burn," other subjects' income from the experiment. To do so, a player had to give up some of his or her own income from the experiment. The price varied from 2 cents to 25 cents for each $1 burned (I must give up 25 cents to burn $1 of your money). Subjects could keep whatever money remained after the burning round.

And burn they did. Nearly two thirds of those tested chose to burn at least part of another test subject's money. Half of all laboratory income was deliberately destroyed. Although the amount burned declined when the price rose from 10 cents to 25 cents, the proportion of players who burned other players' money did not change after the price increase. Players burned other players' money as frequently at a high price as at a lower price.

Subjects who did not receive gifts burned money of those who did—apparently these gifts were perceived by the ungifted as undeserved windfalls. Most subjects, especially the ungifted, burned the money of the wealthiest of players at least as much as they burned the money of those who ranked second in wealth, and at least as much as they burned the money of those who ranked third in wealth. So the money of the rich was burned more, but the money of the poor also got burned.

A total of 29 sessions were carried out with four subjects each, for a total sample of 116 subjects. Subjects were mostly students and support staff with an average age of 25. The research was published last year as "Are People Willing to Pay to Reduce Others' Incomes?" in Annales D'Economie et de Statistique, Vol. 64, February 2002, pp. 39-65. It is also available at Professor Oswald's site at http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/oswald/ .

The study suggests that the subjects chose to reduce the income of other players, even at a cost to themselves. Does this make sense? Certainly it's not surprising that someone would like to take high income subjects down a few pegs. That's one reason most people root for the underdog. The results are consistent with several emotions—jealousy, covetousness, envy, even the desire for revenge.

The dictionary defines the German word schadenfreude as the joy experienced from the troubles of others. The word breaks down into schaden, or damage, and freude, or joy—getting joy from damage. This may motivate terrorists, vandals, computer hackers, and computer virus instigators. But the Oswald-Zizzo results suggest wider relevance than this narrow group of misfits.

The tabloid media exploit schadenfreude by joyfully reporting celebrity troubles. Stories are usually accompanied by unflattering celebrity photos, which is why celebrities dislike paparazzi. Radio host Don Imus readily admits that his show feeds on the troubles of the well known, and he's grumpy when this group is not behaving badly. Perfectionist Martha Stewart's stock problems brightened many people's day.

Could schadenfreude extend even to friends and relatives? Maybe. Suppose a friend of yours in the department just received stellar teaching evaluations. What would be your honest feeling? Gore Vidal once said that "Whenever a friend succeeds, a little something in me dies." What about relatives? Sibling rivalry is as old as Cain and Abel. One of the most popular shows on television is motivated by just that. Robert Barone experiences joy when brother Raymond gets in trouble. The irony of the show's title underscores the source of Robert's frustration-"Everybody Loves Raymond." Well, not everybody.

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